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29 July links: Farce goes on

        Up: ore, $US  Flat:  gold, energy  Down: , Aussie,  metals , CRB, grains, euro Italy and Spain headed to highs: 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

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ANZ backflips on rate rise

Yesterday’s unaninmity among the banks that there will be no rate rise in August has lasted a full 24 hours with ANZ rolling over and going all in: RBA TO LIFT RATES BY 25 BPS TO 5.0% IN AUGUST  ANZ now expects the RBA to lift the cash rate by 25bps to 5.0% in August.

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ASX fair value

  The two speed economy is starting to define the thinking of brokers. Merrill Lynch looks at the reporting season and makes a few fairly obvious observations about where the weaknesses lie. Merrill argues that uncertainty is the theme: in earnings and valuations. They argue if there is no growth in earnings for several years

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Wesfarmers sales up, prices down

  Wesfarmers has come out with a retail update that includes some good-looking sales numbers given Australia’s “cautious consumer” meme. The results by retail area are summarised in the tables below (sourced from the Wesfarmers update):  Full year FY11   Fourth Quarter FY11    The year-on-year details are as follows. Food and Liquor  Sales growth of 6.3%

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Trading Day: a waiting game

The S&P/ASX 200 slumped this morning on overnight falls from other equity markets, and has stabilised at 4485 points, falling 1.2%. Other Asian markets are experiencing similar losses, with the Nikkei 225 down 1.05% at 9941 points, and the Hang Seng down 0.8% at 22354 points. Other risk assets are steady, with the AUD consolidating

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Another “affordability” study

  Below find the new National Centre for Social And Economic Modeling (NATSEM) report into housing affordability. The report is both quite good and quite frustrating. It acknowledges the severe unaffordability of the national housing market but never uses the word “bubble”.  As such, it provides some very good overvaluation assessments but fails completely to canvass

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Chart of the Day: Gold ceiling

Today’s chart from Bloomberg puts the political and economic debate regarding the US Debt ceiling into perspective. I’ve seen many “correlation” charts explaining why gold in USD goes up – but this one has at its heart a simple thesis. “Increasing the debt limit means you print more dollars” I’ll let the MMT’s debate that

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China’s crumbling infrastructure model

  China’s high-speed rail accident has attracted a lot of attention.  Even the FT Lex coloumn has something to say about it, believing that the pace of investment should be slowed.  While I have been arguing here for a while that investment has to be slowed, it is rather harder to see if the “accident” can

54

The horns of a dilemma

Yesterday’s CPI number sent the Bullhawks (Carr, Joye, Bloxham) into the stratosphere. The leader of the group, Chris Joye, had the following to say on his blog: Well, as predicted here more consistently and loudly than pretty much anywhere, Australia officially has a major inflation problem. And I mean “major”. Underlying or core inflation has

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BIS chief pushes the housing envelope

Earlier this month, the Chief of BIS Shrapnel, Dr Frank Gelber, gave an interesting interview on Switzer on the outlook for the housing market (click to watch video). The key discussion on the housing market starts from 5.15, where Dr Gelber says the following (paraphrased): The doomsdayers are “discredited”. “That was crazy stuff… they have

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Bulls, banks turn pathetic

Yesterday Michael Yardney the director of Metropole Property Investment Strategists penned a property piece in Smart Company that began: I’ve decided that I’m not going to participate in the property downturn and I would like you to join me. By now you are probably sick of hearing about the economic wows of the world and how Australia’s economy has

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July 28 links: More slowing

Up: ore, $US  Flat:  gold, Aussie,  metals , CRB, grains  Down: euro, energy  Contagion on for the bigguns: 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

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Australian dollar upside targets

The Aussie has broken the major resistance level and this year’s high at 1.1013 today in the wake then the higher than expected CPI. While it hasn’t really gone on with it yet this break, if sustained, is important in the overall context of where the Aussie might be headed. Look at the long term

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Banks unanimous in calling no hike

Here are the respective analyses of the economics teams at ANZ, Westpac, CBA, NAB and HSBC. All conclude there will be no hike in August but that the risk for Q4 has increased. That will be revelation to you but the details of the respective analyses are useful. Westpac Aust 2011 Q2 CPI +0.9%qtr, 3.6%yr; average RBA

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Trading Day: CPI weighs

The S&P/ASX 200 opened slightly lower this morning and began to claw back losses before the 11.30 CPI announcement. The market has stabilised and is down 15 points or 0.3% at 4557. Other Asian markets are experiencing small falls, with the Nikkei 225 down 0.5% at 10041 points, and the Hang Seng steady at 22568

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No rate rise

The acceleration in both headline but more particularly core inflation will be of concern to the RBA. It is likely, however, that the high inflation number will result in interest rates remaining on hold, rather than precipitate a hike. The rationale behind that view is that the price increases are not demand related which means consumers

50

CPI comes in hot

JUNE KEY POINTS THE ALL GROUPS CPI rose 0.9% in the June quarter 2011, compared with a rise of 1.6% in the March quarter 2011. rose 3.6% through the year to the June quarter 2011, compared with a rise of 3.3% through the year to the March quarter 2011. OVERVIEW OF CPI MOVEMENTS The most

9

Fitch downgrades Queensland

I’ve doubted the resilience of the Queensland economy for some time now. Back in April I asked if Queensland was headed for recession on the back of the failing real estate market. Today I note that Fitch has joined me in those doubts. Fitch Ratings-Sydney/Barcelona-26 July 2011: Fitch Ratings has revised the State of Queensland’s (QLD)

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Abusing money for power

For me, the most remarkable part of writing The Great Crash of 2008 with Ross Garnaut was diving into the murky depths of Wall St’s extraordinary manipulation of money. In the book, we called this “Clever Money”. It was the story of how, over many years, Wall St took the plain vanilla process of securitisation,

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The great depression

Glenn Stevens spoke to the Anika Foundation yesterday with a speech called “The Cautious Consumer” and I hate to be a stick in the mud but I reckon he tried to explain why consumers are doing what they are doing but at his and the RBA’s core they just don’t get it.  The RBA is still tied into the idea that incomes are rising and so should spending,

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Chart of the Day: EUR breakout

With the ridiculousness of the US debt ceiling theatrics still playing out, the markets are having none of it. See below for the breakout in the Euro against the USD: And the GBP against the USD: Of course, things haven’t changed for the de facto “gold” standard of currencies, the Swiss Franc (CHF). This 41

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China’s believe it or not

After last week’s China update, which focussed on the massive malinvestment taking place within the Chinese economy, I received a number of articles from readers for inclusion in this week’s round-up. Thanks for everyone that sent articles in. If you find any articles that you wish to be included in next week’s summary, feel free

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Chinese housing inventory climbs

After continuous rounds of curbs, real estate inventories in various cities have been rising to records on the back of thin volume, although prices are still holding pretty well, according to Xinhua. Unsold inventories in Beijing reached 107,000 units as of 20 July, according to the report, which would take almost 15 months to clear based on the

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July 27 links: Loving a US default

Up: ore, gold, Aussie, euro, energy , metals , CRB, grains Down:  $US  Contagion mixed: 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

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Moody’s warns on Aussie housing market

Try as I might, I can’t find any reference in the Australian media (could be wrong) to a press release this afternoon by Moody’s warning of trouble ahead for the Australian housing market and a review of RMBS ratings. Thankfully in New Zealand they still seem to breathing (via Alex Tarrant at Interest.co.nz): Sydney, July 26, 2011

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Glenn Stevens macrobated

Well, so much for being the lunatic fringe. The Governor of the Reserve Bank of Australia has delivered a seminal speech on the Australain consumer this afternoon and regular readers can pretty much throw it away. They have read it here for the past six months. Glenn Stevens has been “macrobated” (that is, converted to,

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Trading Day: all the way with USA

The S&P/ASX 200 opened higher this morning and has built on those gains, now just over 1% or 47 points higher at 4577. Other Asian markets are experiencing modest gains, with the Nikkei 225 steady at 10054 points, and the Hang Seng up 0.8% at 22482 points. Other risk assets are up, with the AUD

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Glenn Stevens on the cautious consumer

Find below the full text of Glenn Stevens speech this afternoon. The Cautious Consumer Glenn Stevens Governor Address to The Anika Foundation Luncheon Supported by Australian Business Economists and Macquarie Bank Sydney – 26 July 2011 Thank you for coming out once again in support of the Anika Foundation.[1] I want also to thank in

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The bizarre retail debate

One of my favourite journalists, Adele Ferguson of The Age, today calls for a retail bailout: Other figures show that online spending is going gangbusters. There is an estimated $12 billion a year spent in online retail, but it could be much higher than this. Domestic online sales have been growing at 5 per cent