1

Next Week: CPI rising

With another week of debt crises passing, what’s coming up next week in terms of data, announcements and the like? Locally, everyone will be watching the ABS CPI (nee inflation) release on Wednesday, and overseas, all eyes on another round of earnings results for US companies, GDP and Chicago PMI. A busy week for data.

Latest posts

0

CPI preview

NAB has produced a rather useful guide to next week’s CPI read, which all seem to think will be crucial in determining the August interest rate outcome. Personally, I think there’s little chance of a hike, not least because three days later, when it releases its quarterly Statement on Monetary Policy, the bank is most likely

25

A new bullhawkian argument

Today’s bullhawkian charge cannot go without a prod. According to Chris Joye writing in Smart Company: There is mounting evidence to suggest that Australia’s housing market rests at a critical juncture…In my opinion, the near-term destiny of Australia’s housing market very much depends on next week’s second-quarter inflation numbers. If inflation is low, the RBA

3

Trading Day: 22nd July

The S&P/ASX 200 jumped higher this morning and is now 38 points or 0.84% higher at 4594 points. Other Asian markets are up higher, with the Nikkei 225 up 0.9% to 10095 points, and the Hang Seng up strongly 1.35% at 22255 points. Other risk assets are mixed, with the AUD up strongly at 1.0825

8

Australian dollar breakout

After trading the inside range for a while now the Aussie has finally broken topside overnight on the back of the Euro “solution” and along with the ebullience in other markets is threatening to move up and test resistance at 1.1013. As you can see in this chart the Aussie does not have a life

9

George Marshall turns in his grave

Unless you have been living under an economic rock you have probably heard by now that the Euro-elite is once again trying to convince the economic world that they have got a solution to the Greece driven debt crisis in Europe. A leaked draft statement from the summit can be found here. The Guardian UK

4

Hilarious Euro Crisis Song

Here’s my winner for this year’s Eurovision Song Contest. Fellow MacroBusiness blogger, Delusional Economics, has done a great job of keeping us abreast of the potential crisis unfolding in the Eurozone. But in case you are still struggling to understand how Europe got into this position, the below video by the UK’s Guardian may be

29

Households and disleveraging

The RBA released its quarterly Household Finances ratios (B21 XLS table) yesterday, which highlights the following ratios going back to March 1977 (in most forms): Debt to Assets Housing debt to Housing Assets Debt to Disposable Income (total, housing and owner occupier) Assets to Disposable Income Interest Payments to disposable income Instead of waiting for

2

Chart of the Day

If they knew about risk, what would keep bank managers up at night? Given that one of their own has now stated that banks should be treated like utilities, a restructuring of Tier 1 capital might see this ratio drop to more non-Minsky stable levels (say 3:1 or 2:1), and bank profitability (based on Return

8

More on Chinese stagflation

As the HSBC flash estimate for China’s manufacturing PMI falls below 50, indicating a contraction of manufacturing activities, people might start to wonder again whether there will be a hard landing.  The first half economic data was robust, with GDP growing at 9.5% over a year ago while inflation hit a new high at 6.4%,

9

July 22 links: Selective default

Rockets: euro, energy, Aussie Up: ore Down: metals, gold, $US, CRB, grains Contagion reversal carnage: 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

5

One for the insomniacs

If you are having trouble sleeping tonight then here is a late night show for you. Episode 46 of the EuroZone Debt Crisis in semi-live blogging format from the UK telegraph. The latest instalment RTRS-DRAFT SUMMIT CONCLUSIONS CALL FOR “MARSHALL PLAN” OF INVESTMENT, GROWTH STIMULATION FOR GREEK ECONOMY RTRS-THREE OPTIONS FOR PRIVATE SECTOR ROLE IN SECOND

16

China’s pressures intensify

h/t WSJ The HSBC China flash PMI was out this afternoon. According to the SMH: HSBC’s China Flash PMI for July dropped by its fastest pace since March 2009 and pointed to a monthly contraction in the country’s vast manufacturing sector for the first time in 12 months, the purchasing managers’ survey shows, while a

4

Trading Day: risk back on?

The S&P/ASX 200 opened higher this morning and built on those gains up over 0.5% before falling sharply just after midday – possibly due to news about the fall in Chinese industrial activity. The market is now 22 points off its intraday high, at 4554 points, only 5 points up on yesterday. Other Asian markets

5

What if it’s all just a bad dream?

The debt problems in the US and Europe are creating widespread bearish sentiment in stock markets. The interconnection of financial markets is so great that reading investor sentiment has become a little like trying to spot fractals. A Greek butterfly flaps its debt laden wings and a hurricane occurs in the the Standard & Poors. But what happens

35

Death of a gecko

The effects of the slowing rate of credit issuance (disleveraging) continue to seep into the broader economy. With sales volume charts like this in Queensland it really was a matter of time before something had to give. It therefore shouldn’t really surprise anyone that the Queensland Real estate industry is in for a tough time

7

European risk rally?

News this morning is that there is something of a breakthrough in Eurozone negotiations. From the FT: Germany and France appeared to settle their differences late on Wednesday over a new rescue package for Greece. No immediate details were available but Steffen Seibert, a spokesman for Angela Merkel, the German chancellor, said “a common German-French

4

Fearful symmetry

Find below Westpac’s newish regular economic document, called “Fearful Symmetry”, a monthly chronicle of the Indian economy. The research effort of the institutional bank is hot so right now!

1

Chart of the Day

Following on from Bullion Baron’s chart of house prices in gold, here’s an interesting correlation (and yes, I know correlation is not necessarily causation) to ponder. First, the change in house prices in major US cities (from the Case Shiller price index): Then, the gold price plotted against the Washington DC:Detroit house price ratio: I

101

Bulls at sea in falling market

As we recorded at the time, it was two months ago that Residex CEO, John Edwards, had the following to say on the falls in Australian house prices: I have been researching the housing markets for more than 21 years and I am sensitive to ensuring we have a properly informed market. Because of this,

48

China warnings

In the past few days there have been three new interesting media outputs that warn of growing risks of a Chinese hard landing. The first is by, of all institutions, the Australian Treasury. In a new Working Paper full text below), Treasury offers a respectable assessment of Chinese macroeconomic navigation through the GFC, and the

20

Ziggy’s nuclear meltdown

Nuclear doyen, Ziggy Switkowski, must be quite frustrated. Why doesn’t everyone get it? His beloved solution to climate change and energy security is not just a political hot (dare I say radioactive) potato, and the recently announced $10b Clean Energy Finance Corporation won’t be allocating a single dollar to funding it. His most recent piece on

5

July 21 links: Three dark clouds

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

22

Europe spins again

We are now stampeding towards god knows what in Europe. There is still absolutely no consensus on what, who or how the Greek issue is going to be resolved, and still absolutely no one is talking about the fact that without a full monetary and fiscal union, the issuance of true Euro bonds , or

19

Should miners trade in yuan?

A month or so ago, before I was struck down with a monstrous lurgy, Rio announced that it was considering pricing some of it’s iron ore sales in yuan. From The Australian: In another sign of China’s growing power in world markets, the world’s third-largest miner is openly canvassing switching its iron ore settlements from

2

The coming RBA downgrade to growth

As the debate rages over monetary policy the data continues to paint a picture of a weak domestic economy with  a growth profile which is likely to undershoot the forecasts of both the RBA and Treasury over the remainder of 2011 and into 2012, the Westpac leading index was released earlier today and after a

0

Trading Day: 20th July

The S&P/ASX 200 jumped over 1% on the open, and has built on those gains, rising a total of 1.61% or 73 points to 4541 points. Other Asian markets are all up, with the Nikkei 225 up 1.34% at 10022 points, and the Hang Seng steady at 21,915 points. Other risk assets are mixed, with

9

Leading indicators point south

The Westpac/Melbourne Institute Leading Indicators for May are out and point to more weakness ahead. Growth Rate of Leading Index well below Trend The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 1.6% in May 2011, well below its long

3

Gas is solid

Energy is pretty much a one way bet in the global economy, perhaps the best play at a time when Australia’s two speed economy is sputtering. Brokers are having a look at Woodside, just about the biggest pure energy play in the Australian market. The question, as ever, is how much is the future priced

13

Woolworths sales up 4.7%

Woolworths Limited (WOW) released their full year sales results (end of June 2011) today and it makes for interesting reading. The headline number is an increase of 4.7% in nominal terms on last year sales ($54.1 billion, up $2.4 billion). That’s an impressive result considering the flat line in other retail spending, as highlighted by