8

Dissecting rising unemployment

While the echoes of the financial crisis bounce off the walls of fiscal stimulus and austerity it seems an opportune time to take stock of labour market conditions. The recent uptick in the headline rate of unemployment from 4.9% to 5.3% over July and August left some mainstream commentators confused.  Indeed, the irrationally optimistic have taken

Latest posts

13

September 26 links: Washington crunches

Europe’s plan. Telegraph Geithner’s plan. Bloomberg Zero hour for the euro. Wolfgang Munchau Must, must read More must read. Gavyn Davies No need for French bank emergency facility. Bloomberg Replace “no” with “great” Week ahead for Dow. Calculated Risk Five banks account for US derivative exposure. Zero Hedge There are only rogue banks. Washington Post What wage inflation looks like. The

78

The false dichotomy of greed

The Euro crisis appears to be developing into something similar to the 1980s Latin American debt crisis when the idea that, to quote Walter Wriston, who ran First National City/ Citibank from the 1960s into the 1980s it was assumed that: “countries don’t go out of business.” The Latin American leadership demonstrated that they, in effect, could,

38

Liquid fluoride thorium reactors

I’m no energy expert, hell I’m not even an energy novice. But there is no doubt that energy provision and security is a massive driver for the world’s economy and politics. Liquid Fluoride Thorium Reactors are a technology that seem to be getting a lot of attention recently and I understand that the Chinese have a development program

19

Banks to shed jobs

I’ve been questioning the ability of the Australian banking sector to contiue to deliver high levels of profits under current economic conditions for a while now. I mentioned back in June that the major banks seemed to have used adjustments in bad debt provisions in order to bolster their profits and more recently I noted that Westpac has begun to struggle to maintain

13

Weekend Links : Metal meltdown

Smashed: gold ,metals Down: $US, Treasuries, CCI Up:  Aussie, euro Mixed: grains 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

9

Trading Day

The S&P/ASX 200 Index lost 1.5% or 57 points to 3907, after a volatile day from absorbing last night’s crash across Euro and US markets and a “statement” from the G-20. In after hours future trading, the market is slipping below 3900, whilst Euro and US futures point to some minor gains. Asian markets experienced

23

Full G20 communique

Find below the text of the impromptu G20 Finance Ministers communique that has has risk markets all piling it back on. Read it and go figure. The wonders of being oversold! We, the Finance Ministers and Central Bank Governors of the G20, are committed to a strong and coordinated international response to address the renewed

11

New CPI continues the housing deception

Yesterday the ABS released the new basket of goods weights for the CPI and the Analytical Living Cost Indexes (ALCI).  This draws upon changes agreed during the 16th Series review with weighting revisions in all groups using the results from the 2009-2010 Household Expenditure Survey (HES), which surveys the expenditure patterns of almost 10,000 households

23

Europe must choose (Updated)

The big news from Europe last night was the “surprising” PMI numbers. But as usual the news also goes behind the headline. The PMI again highlighted the underlying issues and delusion in Europe. As I have spoken about many times before, the European model is based on the fact that Germany is an industrial powerhouse

2

Market vs RBA on bank stability

The RBA released its quarterly Financial Stability Review today. It is a fine document with some incredible research and, I’m happy to say, strikes a more cautious tone about bank stability than recent speeches by RBA boffins have suggested. The document tells an upbeat story of the steady cleansing of Australian bank reliance on wholesale

4

Household financial conditions rebound

Missed this yesterday. The Melbourne Institute’s Household Financial Conditions survey for the September quarter rebound from its June plunge. Not surprising given the sudden relief apparent on the interest rate front. Interestingly, housing investment remained on the nose, contradicting the recent jump recorded in the Westpac consumer confidence survey. I think it’s fair to say

31

Chart of the Day: gold correction

Given last night’s undollar crash included an immense correction in gold, which was called by House and Holes here, I thought Data Diary’s chart on gold vs the USD is timely and convincing. First, here’s what happened in the last 3 days of trading gold, note the wild trading range: Here’s my technical chart of

83

How low will the Australian dollar go?

The Australian dollar fell precipitously overnight and as I sat down earlier this morning it was actually trading under 0.9700. Remembering that earlier this week the AUD was above 1.03. This is not unexpected to our readers and while I don’t want to turn this into a trading blog it is worth having a look

22

The fruits of lunacy

The Western recession I’ve been awaiting for three months is arriving. Last night’s European flash PMI for September was a shocker, falling 1.5 points into contraction at 49.2. Here is a chart of the PMI and its relationship to GDP: Moreover, here’s a chart of the core versus periphery nations: Well there’s a surprise. Peripheral

2

Chinese yuan set to fall

More than once, I have expressed the view that in the face of global slowdown, Chinese policy makers may want throw in the towel on yuan appreciation. Markets too are beginning to price the possibility after the weak HSBC manufacturing PMI flash estimate and the on-going market jitters following the disappointments of Operation Twist and concerns on Europe. Michael

30

High savings are the new normal

RBA Assistant Governor, Phil Lowe, yesterday gave an interesting speech on the changing patterns in Australian household saving and spending. In particular, the speech describes some of the possible reasons underpinning the recent rise in Australia’s household savings rate and ponders whether this shift is a temporary phenomenon or likely to be long-lasting. First of all,

22

Central bank independence under siege

The Reserve Bank of Australia’s independence is an illusion.  The RBA exists because the Menzies government passed the Reserve Bank Act 1959 to create it, and subsequent governments, while occasionally tinkering with the operational framework, have seen no reason to abolish it. I have long found it interesting that even relatively minor fiscal decisions of

7

Equities Spotlight – Webjet (WEB)

In this weeks second equities spotlight (what a bonanza!), we take a look at online travel company Webjet (WEB). The Business According to the FY11 annual report, Webjet is an: ..an electronic manager, marketer and credit card merchant of travel and related services utilising the internet and other mediums. Webjet started out as a website-based service that

11

September 23 links: Undollar bloodbath

Up: $US, Treasuries Bottomless: gold, metals, CCI, Aussie, euro, grains 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 Year

7

Trading Day

The S&P/ASX 200 Index closed down 2.6% or 106 points to 3964, after a worldwide “risk off” event coming after the US Federal Reserve announced its Operation “Twist” last night. In after hours future trading, the market is slipping whilst Euro and US futures point to similar losses. Asian markets experienced similar moves, Japan’s Nikkei

19

Chinese manufacturers slow some more

The flash PMI for China is out this afternoon and shows ongoing contraction, with an acceleration to the downside for export orders: HSBC Flash China Manufacturing PMI™ Manufacturing sector operating conditions deteriorate marginally in September • Flash China Manufacturing PMI™ at 49.4 (49.9 in August). 2-month low. • Flash China Manufacturing Output Index at 49.2 (50.2 in

11

Westpac ACCI Survey thumped

Westpac and the ACCI today released the 200th edition (started in Dec 1961) of their quarterly joint survey of Australian industry and it does not make comfortable reading. Westpac says in the summary conclusion that: This is a survey which is sending a very clear message. It is time for the authorities to ease financial

11

Brokers on the run

  During periods of gloom, analysts like to revert to the obvious. Goldman Sachs has a report out noting that “consistent with periods of high risk aversion investors have moved to discount the potential earnings risk by discounting the prospective pe (price earnings ratio)” Well, yes. It’s called a bear market, I believe. Goldman notes that current

21

Chart of the Day: US dollar rally

With last night’s announcement by the Federal Reserve of Operation “Twist”, instead of milky wilkies (a proper QE3), the US dollar is now on a tear. Up. The US Dollar Index is something I’ve followed and mentioned in “Chart of the Day” posts and equity/risk market analysis for some time now. In my 7th September

7

The Shanghai mega-bear market

The past 10 years were really the decade of China, those who got into Chinese equities and real estate have struck it rich. Human memory has a recency effect and Chinese have ignored the fact that there are times when equities and real estate valuations come down for a very long period of time after an extreme overvaluation. As

31

‘Boom Boom’ booms

Find below last night’s speech by Deputy Reserve Bank Governor Rick ‘Boom Boom’ Battelino (with commentary) at the New York Euromoney conference where the Australia politico-housing complex is in full pitch. In general terms, I found the speech well constructed and its discussion of Australia’s economic relationship with the US and China appropriate. There were

18

Australian dollar crash

The FOMC released the decision from its two day meeting early this morning and, as widely anticipated, they announced that they were going to extend the duration of their Treasury holdings in order to try to get the entire interest rate curve lower. They said: …decided today to extend the average maturity of its holdings

9

Greece lops off another limb

Europe continued to struggle with its own self-destruction overnight . The Greek government has now announced its additional spending cut plan: Greek Prime Minister George Papandreou’s government said it will accelerate budget cuts, targeting civil servants’ wages and pensioners to keep emergency loans flowing and avoid default. Measures announced late today following two rounds of talks