5

Weekend Links

Markets: Dollar: $US, flat Treasuries, ore, energy down Undollar:  euro, Aussie, gold, metals, CRB grains mixed. Sovereign Yields: 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

Latest posts

5

Trading Day

The S&P/ASX 200 Index jumped on the open again today, but was slowly sold off before the 2pm turn when a flurry of bids were made, probably on positive leads from other Asian markets. The bourse finished up 24 points or 0.6% to finish at 4239 points: The market still needs to clear the 4300

6

European banks prepare to shrink

Although the headlines are quiet at the moment there is still quite a bit occurring behind the scenes in Europe. Obviously everyone is still waiting for a resolution of the Greek situation and that story is changing by the hour. The latest is that there is some sort of deal, but it won’t be available

10

China’s flash PMI flat

The January China Flash PMI is out and is virtually unchanged from at 48.8 versus 48.7 in December. To my mind the components are more encouraging with new export orders and backlogs of work reversing their declines and new orders markedly easing the pace of decline, suggesting that some rebound in demand lies ahead: Still,

4

Export prices supported by quarterly contracts

December quarter export prices are out and fared better than I thought they would. Down just 1.5%. This is a bit surprising because iron ore and coal make 50% of exports and both fell significantly. First an iron ore price chart: That’s a big fall, confirmed this week by Fortescue Metals, whose average spot price

40

Chart of the Week: Deleveraging

We end the week with 2 charts from a recent report from the McKinsey Global Institute “Debt and deleveraging”, which provide elegant snapshots of “progress” of debt and deleveraging by the 10 largest “mature” global economies. The first chart (but second in the report) shows the composition of debt by country. Notably Japan is leaps

0

China links

Courtesy of Sinocism: Why the feds smashed Megaupload – could US use this argument against online chinese video sites? two at least, youku and tudou, have some us presence through their us market listings, though those two have significantly cleaned up their acts w respect to us copyrights China rushes to jail activists before political handover

20

NAB pays for sterling

From Banking Day: Novelty value helped National Australia Bank sell a covered bond denominated in sterling overnight on terms better than banks in Britain can achieve. NAB priced the £500 million bond at 145 basis points over three-month Libor, Dow Jones reported and at the low end of price guidance. The bonds are secured over

14

Market Morning

Risk markets continued to rally last night, with the US dollar falling in response, although gold was subdued, as the US corporate earnings season rolls on, with good dataflow also continuning to buoy markets. In detail: The UK FTSE put on 38 points or 0.6% to finish at 5740 points, now above its resistance level

12

Is the Baltic Dry worth listening to?

From 4Cast comes this take on what the recent crash in the Baltic Dry means and whether it’s worth listening to. I must say, the correlation between the BDI and Chinese PMI is closer than I’d imagined. Perhaps it’s time to dust off the index…   Weakness in the Baltic shipping index is gaining a

53

Mining boom rhetoric dies with job cuts

Do you get the sense right now that the Australian economy is a little rudderless? If you do, I don’t blame you. This morning’s media coverage of yesterday’s jobs result is chock full of “surprises”, “shocks” and “unexpecteds”. I’m not sure why that’s the case. It’s no surprise at all. MB has been forecasting this

85

Melbourne rental vacancies skyrocket

It seems that Melbourne’s booming dwelling construction is having the desired effect, with the state’s rental vacancy rate hitting a seven year high of 4.4% according to SQM research: This compares to the national rental vacancy rate of 2.4%: In both charts, there is an unmistakable seasonal element to a December spike but, equally, there’s

16

Examining average hours worked

Yesterday’s analysis of the Australian Bureau of Statistics (ABS) December labour force data threw up the below chart showing how aggregate hours worked across the Australian economy rose in the month of December, but remains relatively flat compared with 12 months prior: Reader, Avid Chartist, requested that I provide a chart showing aggregate hours worked

6

January 20 links: Jobs wake up call

Markets: Dollar: $US, Treasuries, ore, energy fall Undollar:  euro, Aussie, gold, metals, CRB flat, grains up. Sovereign Yields: 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

8

Trading Day

A blessing of unicorns jumped across the rainbow fields of the S&P/ASX 200 Index today, but were taken out by short-statured hunters on a grassy knoll, as the market closed down 3 points to finish at 4214 points. The 4200 point level of resistance remains breached, with volume building and above the 20 day moving

42

Inflation expectations jump

From the Melbourne Institute today, inflation expectations leap in January: The median expected inflation rate, reported in the Melbourne Institute Survey of Consumer Inflationary Expectations, increased to 2.8 per cent in January from 2.4 per cent in December. According to Dr. Michael Chua, a Research Fellow at the Melbourne Institute, “This month’s increase in consumer inflationary expectations

11

A new unemployment consensus – up

Three banks, all agree, unemployment is headed up – macrobated as it were. Westpac is the most bearish: Westpac Economics: first impressions Dec Labour Force Survey surprised with –29.3k, +24.5k full-time and flat unemployment of 5.2%. The December Labour Force Survey headline was weaker than expected; market +10k and Westpac’s bottom of the market –10k. There was

6

Employment hangs on

The Australian Bureau of Statistics (ABS) has just released the December labour force statistics and, like all of the releases this week, the data is mixed: On the positive side of the ledger, full time employment rose by 24,500 persons to 8,051,000, partly offsetting the heavy losses (-39,400) of the prior month. However, this increase

30

Rate cuts boost house price expectations

Westpac has released its quarterly house price expectations index. Since October there’s been a marked lift: The Westpac-Melbourne Institute Consumer House Price Expectations Index posted a strong rise in January, increasing 16.1pts from 9.0 in October to 25.1. This is the highest reading since April last year and the first gain since January 2010. While

35

The World Bank scenario for Oz

Far be it for me to disrupt today’s happy feeling, but following yesterday’s alarming (alarmist?) World Bank report, reader Flawse this morning asked what the consequences for Australia would be in the event of a repeat of a Lehman bank freeze. I don’t think this outcome likely. But it’s an interesting thought experiment and not

20

Zombie Europe

One of the major themes that I have been discussing in Europe for a long period of time is the simple failure of logic in which the European periphery is being instructed to push deflationary policy onto their economies, yet at the same time expected to meet their existing, and growing, debt obligations. In the

46

Pessimism fatigue

Earlier this month I said: So we could see a de-coupling between economic outcomes and market performance particularly should quantitative easing recommence in the US, Europe and the UK I really think this is and remains a tradable investment theme in at least the first part of 2012 and the equity market, as represented by the

8

Chart of the Day: pump up the volume

Today’s chart is a study I’ve completed on volume of stocks traded on the S&P500 and ASX200 share markets. Given its still the first month of the year, it is expected that volume would be low (and hence volatility high?), with the gnawing possibility that the current rally in risk assets is nothing more than

2

Market Morning

Risk markets continued to rally last night, with the US dollar falling in response, as the US corporate earnings season rolls on. In detail: The UK FTSE put on 8 points or 0.1% to finish at 5702 points, just on its resistance level at 5700 points and looking bullish. The German DAX was also up,

15

Why not adopt NZ’s no-fault national insurance

I do love New Zealand.  It’s a beautiful country with great people and a relaxed attitude.  One factor that supports a relaxed attitude is New Zealand’s national enduring no-fault accident insurance scheme, which eliminates some the perceived legal risks that can stifle innovation, new business, increase medical costs, and reduce private land utilisation. I want

25

January 19 links: Three bullish themes

Markets: Dollar: $US, Treasuries, ore, CRB, grains, energy fall Undollar:  euro, Aussie, gold, metals up. Sovereign Yields: 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

4

Trading Day

A choppy day on the S&P/ASX 200 Index today up just 2 points to finish at 4217 points. The 4200 point level of resistance remains broken, with volume now building post NY, above the 20 day moving average (pink line in chart below), with the the next target of 4300 points to be cleared before

25

World economic catastrophe!

As you may have read, the World Bank has issued its half yearly update, Global Economic Prospects, causing a major stir with a pretty nasty forecast of 2.5% global growth with risks to the downside if Europe gives us a credit event. I’ve attached the report below – rare as hens teeth these are, has

2

China links

Courtesy of Sinocism: Art’s New Pecking Order – WSJ.com – Picasso and Warhol are being outsold by Chinese painters as a new wave of wealthy buyers reshapes the global market. Inside China’s high-rolling art world…Another friend, Beijing hotelier Zhang Rui, has started decorating every room in his new Gallery Hotel with pieces borrowed from a gallery

19

Residex house prices

Residex has released some new stats on the Australian housing market. I tend not to follow Residex to closely. I prefer RP Data’s hedonic methodology. However, in the interests of full disclosure it is always important to get a second opinion. The latest data from Residex is below. There is nothing remarkable about it and