The chatterazzi are indulging in hand wringing over Woolworths’ first profit downgrade since the company re-listed 19 years ago. “Strange days indeed” says one broker. “Myriad factors” are “laying siege to the fortunes and future of our major retailers” says The Age. Have to keep a watchful eye on those “myriad factors” at all times

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ANZ softens on house prices

In late July last year the ANZ bank released one of its reports on property investing called the Australian property outlook. Its summary for the Australian residential housing market was: With interest rates expected to rise, we expect house price growth will (temporarily) slow to low single digits in 2011. Nonetheless in the absence of


The levy is right

According to the SMH this morning: The Prime Minister, Julia Gillard, has all but confirmed that a one-off levy to help cover the cost of flood damage is on the cards but the bulk of funds will be raised by budget cuts. Speaking before the inaugural meeting yesterday with the 13-member taskforce of business and


Links January 25: Mixed messsages

Inflation is coming. Alphaville Not to the US. John Dizard, Tim Duy Flood inflation here. FT Quant churn. Zero Hedge Short bonds & stocks. Nic Lenoir China to slow. China Daily Greed siezes metals. Bloomberg Ore falls !?!?!?! Bloomberg Ore flood panic. John Garnaut Record ore inventory. Bloomberg Levy and cuts pay for floods. SMH New frugalism


China’s Demographic Time Bomb

The 21st century will be the century of old age, where declining birth rates meet longer life expectancies. Nowhere are these demographic shifts occurring as quickly as in China, which is facing demographic challenges that threaten to slow its long-term expansion. China’s demographic headwinds stem from its ‘one child policy’, which was brought into effect in 1979 and is


Flood moves to real estate

The real estate fallout from the Queensland floods has begun, and the re-pricing of flooded areas is underway. If you have $250,000 in cash you maybe able to get this little beauty , but given the pre-flood median in that area was $300,000 I am very doubtful it will sell for anything like that price, if it does at


Fitch’s Freudian slip

FitchRatings recently released its 2011 Australia outlook report on structured Finance.  The overall message from the report itself is not particularly interesting and has received little press. The  report rates RMBS as stable, ABS stable but with some weakness and CBMS Stable/Negative, and has some discussion of the Queensland flooding on the RMBS market. Flooding


Fostering failure

Australia’s corporate sector, having resoundingly failed the test of globalisation, is now unerringly positioning itself to become part of the global food chain. Many ASX listed companies are likely to be swallowed up by global players that possess the managerial skill so lacking in Australia’s cartels. Just imagine how much more they will be worth if they are


Fitch as a fiddle final

Bloomberg and AAP/Business Spectator both report breathlessly this morning that the big four banks have passed the Fitch stress test. The AAP/BS version is particularly flattering: Under a severe scenario, gross losses could total over $6 billion across all four banks, with net losses reaching 10 per cent of their combined operating profits, Fitch said in a


China’s blunder

The ongoing demise of the Bretton Woods II (BWII) currency system and its implications for the balance of world growth has been a recurrent theme for this blog. And if recent commentary around China is any guide, the breakdown is accelerating toward another critical moment. To recount, this blogger wrote last year: BWII is the


Links January 24: Demographia damnation

New Demogrpahia housing survey. PDF One poor harvest from chaos. Independent (h/t Naked Capitalism) US saving less. WSJ Irish government collapses. Irish Times Recalling January 2008. Doug Noland Scenarios for oil. FT Rent seekers council attacks. SMH Rent seeking retail prepares. The Age RBA to raise in March. David Uren Palladium joins supply shock. Mining Weekly


More on the death of the beer economy

As we mentioned back in early January: There is no sadder story for an Australian than the closing of a pub, but 300 at once should probably signify a national day of mourning. Yet as debt issuance contagion makes its way through the economy, the banks have no choice but to start picking off the


Detailed Report: The 2011 Demographia Housing Affordability Survey (By Leith van Onselen)

The 7th Annual Demographia International Housing Affordability Survey has just been released and, once again, it has delivered a stern condemnation of housing policy in Australia. This year, the Demographia survey has been expanded to 325 markets in seven countries: Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom, and the United States. The


More Flood Outcomes

Some more flood related news, after Goldman Sach’s and ANZ‘s $20 billion estimates and Julia’s A team. ABEAR has taken a punt at the export hit THE devastation from recent floods will cost the Australian agricultural sector $500-600 million, while coal exports will take a $2-2.5 billion hit in 2010-11, according to a new report.


Weekend reading: China’s banks

China’s problem. Paul KrugmanChina’s inflation dilemma. Charlie FellChina’s SHIBOR bounces big. Zero HedgeChina NPL’s. Michael Pettis30% chance of Chinese hard landing. Ambrose Evans-PritchardGreatest bear market rally in history. Calculated Risk The efficacy of capital controls. VOX(h/tNaked Capitalism)The future of Fannie & Freddie. NYTEurope’s secret fiscal integration. BloombergInflation nutters. Samuel BrittanThe love of LPTs. Ian VerrenderMelbourne’s


Guest post: Of China and guano

Following the La Niña-related floods in Queensland earlier this month food prices have spiked, adding to an already serious inflation crisis around the world and toppling the government of Tunisia. And while protesters in Tunis were hardly thinking of Queensland bananas or sugarcane as they mobbed the streets, the changing and dramatic climatic conditions that


Links January 21: Ratcheting up

China’s loan cap. Caixin (h/t Naked Capitalism)China’s illusory decoupling. Asia TimesChina overheating. FT, Michael SainsburyOre price drivers. FTChina can beat inflation. Gavyn DaviesOre price record. BloombergOre volume record. The OzIndian exports the key to rally. ReutersChinese sabre rattling. Washington TimesMore US homes. Calculated RiskFinancialisation of cows. GMMRamp mining tax to pay for flood recovery. Ian


Reader’s Question: Another visit to CentralBankopia

We received an e-mail from David this week. I really love your blog, and “get” nearly all the concepts on there now, but the one that I’ve never been able to grasp is your fiat currency “just print money” centralbankopia… You seem to be suggesting that the Federal Reserve should just “print money” as/when required,


The Days of Easy Credit are Numbered

Back in December, I wrote the following: In the early-1990s, non-bank lenders entered the Australian mortgage market and began raising funds via securitisation on wholesale debt markets. The rise of these non-bank lenders caused an intensification of competition amongst mortgage lenders. With no formal regulator and no rules outside of regular trade practices and corporations law, they


Consumer confidence takes another hit

Given that consumer confidence was already in the doldrums on the lead up to, and just after Christmas, it is little surprise that we note that one of the largest natural disasters in Australian history has given it a good kick while it is down. The Queensland floods have knocked the stuffing out of consumer


Another round of pressure

With one of the Banking overlords about to front up to a senate committee it is about time for the media to remind us all about the “pressure” they are under to raise rates. Australian banks remain under pressure to pass on higher interest rates to customers, as intense competition for funds from cash-strapped European


Pillars of boom

Yesterday Bloomberg published an interesting article on Rio’s iron ore output: Production climbed to 50.1 million metric tons in the three months from 47.2 million tons in the same period a year earlier, according to a statement today from London-based Rio, the second-biggest exporter of the commodity. The figure beat a UBS AG estimate of


Links January 20: Ore rocket

Ore approaching record high. BloombergCommodities bust. Zero HedgeAsian inflation. ReutersChina should get guarantee to buy euro. BloombergChina and Germany. FTIreland defaults. BloombergChina and the US, mutual interests. Martin WolfHow to get tough with China. Naked CapitalismChina NOT selling Treasuries. EconompicBanks want to raise again. SMHChina’s holiday home. Bernard Salt


Links January 19: Chk Chk … Boom

Spend big on recovery. SMHNo Qld labour shortage. The AgeCommodities rocket. The OzAre banks fixed? Robert Peston(h/t nakedcapitalism)The tinkerbell market. Naked Capitalism, Zero HedgeGermany offers truth or dare to market. Calculated RiskMarket takes dare: Greece, Ireland, Portugal, Spain, Italy, BelgiumWorld bank vs China. FTChina’s Treasury holdings. Zero HedgeKashkari on US debt. BloombergCurrencies, controls and exports.


More Planning Madness

An interesting article appeared today in the Fairfax press about the extortionate cost of land on the fringe of Australia’s capital cities. The value of land sold…rose 5.2 per cent to a median lot price of $186,629 over the year to September, or 2.8 per cent in the quarter alone. “Land price appreciation is a key cause of


The bill rises, feds have no idea.

As we said when the Queensland disaster was underway. It is becoming an economic reality that the $5 billion price tag will be far too low; Today we note the ANZ is estimating a number 4 times the original estimate. The rebuild effort in the aftermath of Queensland’s floods could top $20 billion, according to


Maxed out

While retail is floundering, manufacturing is dying and new housing credit is falling we note that Australians are still maxing out their credit cards, and when they have, they are just getting a new one. Australians have racked up a record $48.8 billion in debt on credit cards while banks wring hard-pressed families with interest


S&P’s missing $400 billion

Regular readers will recall that this year’s coverage began with the unwholesome news that S&P were in the process of downgrading Australia’s BICRA score – the credit rating given to the Australian financial system. This blogger has chopped a rather important chart from the primary BICRA document (see above, full document below) in order to


Tough choice

A slew of material out yesterday and today has bearing on the medium term outlook for interest rates. First, Reuters reported uncomfortable news on inflation: A private gauge of Australian consumer prices showed annual inflation ran above target in December, with price pressures likely to grow as the Queensland floods push up food costs. The