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October 6 links: Undollar joy

Plunge: $US Down: Treasuries, ore Up: CRB, Aussie, euro, grains, metals 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

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9

Trading Day

The S&P/ASX 200 Index closed up 54 points or 1.4% today to 3926 points after absorbing the strange end of session rally on Wall Street overnight. In after hours trading, the index is up another 15 points, with Euro markets also pointing to firm opens. Asian markets experienced falls, with Japan’s Nikkei 225 closing down

30

Ken Henry revisits the RSPT debacle

Peter Martin reports this afternoon from the Tax Summit that: Former Treasury boss Ken Henry has conceded he mishandled the selling of the mining super-profits tax the former Rudd government proposed last year. Addressing day two of the tax summit in Canberra, Dr Henry said his review took for granted that Australians understood the difference

18

Iron bomb

Australia’s lifeline in China, John Garnaut reported this morning the worrying news that: The Chinese steel mills that have been holding up the Australian economy are under pressure, with steel prices falling and iron ore prices expected to follow. Robust steel demand in China led Australia to post a record $5.9 billion in iron ore

47

Retail sales better than expected

Good news on the economic front has been hard to come by lately and for all the talk of a retail spending drought the data this month and last was far from terrible (even if well below historic averages). Indeed this month’s 0.6% increase in retail sales for August matched the upwardly revised outcome for

12

Just how tight are rates?

From the boys at 4cast comes this fascinating alternative take on how tight Australian monetary policy really is: The RBA took away its own self-erected roadblocks to policy flexibility today using CPI revisions to move away from the stale tightening bias to one of willingness to respond to (negative) risks. Timing remains an issue of

12

Chart of the Day – Dexia Bank tanks

As reported yesterday, French-Belgium bank Dexia was downgraded by Moody’s and are resisting pressure to actually write off losses on sovereign debt. As Delusional Economics said: Dexia received a €6.4 billion bailout during GFC1 and like many European banks has a large exposure to sovereigns, specifically Italy. It seems the market is ahead of the

34

Bull versus bear is dead

As the S&P500 rocketed into the close this morning on yet another European bailout rumour, it occurred to me just how broken the equity market is right now. We are trapped in bear market dynamics of grinding sell-offs punctuated by explosive short-covering rallies with no end in sight. The obvious conclusion to draw is that we

22

Europe stumbles, Dow cheers

As I expected there doesn’t seem to be any clear consensus on anything of real importance coming out of the latest meeting of European financial ministers. The only real resolution was for the Greek collateral deal for Finland, but once you read the details you have to wonder why they would even bother: The deal will

20

Is mining threatening our food security?

..there must be some data that they could have used to address the “value” of having future food security. This was a request once made of me in the context of losing productive capacity in agriculture from cutting water entitlements on environmental grounds.  It certainly got me thinking.  Given the recent conflicts between farmers and

19

China’s hard landing conundrum

A Chinese hard  is not an option, at least while there are other options. So, I have been asking myself for the past few months how to avoid a hard landing, or to delay it at the very least.  The most popular defence of the bullish camp (or the most popular argument against the bearish camp)

13

October 5 links: China worries

Rocket: $US  Flat: Treasuries, ore Crushed: CRB, Aussie, euro, grains, metals 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

11

Trading Day

Another volatile day on the S&P/ASX 200 Index, with a large absorption of data, closing down 25 points or 0.6% today to 3872 points. The market is up slightly in the after hours futures market. Asian markets had larger falls, Japan’s Nikkei 225 closing down 1% at 8452 points, and the Hang Seng also down

3

RBA releases commodity prices

The Reserve Bank of Australia (RBA) has released its preliminary estimates for September 2011 commodity prices. Here’s the summary (emphasis added): Preliminary estimates for September indicate that the index rose by 1.0 per cent (on a monthly average basis) in SDR terms, after rising by 0.3 per cent in August (revised). The largest contributors to

19

Bill Evans looking good

Westpac’s Bill Evans cut from the pack back in July to forecast year end rate cuts. He was ridiculed at the time by many, including some especially infantile drivel from the bullhawks. Well, after today’s RBA meeting he’s looking awfully good. And today issued a note reaffirming his stance: Westpac Economic update As expected Reserve

19

Cut next month, if needed

Statement by Glenn Stevens, Governor: Monetary Policy Decision At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent. Conditions in global financial markets have continued to be very unsettled, with uncertainty increasing about both the prospects for resolution of the sovereign debt and banking problems in Europe, and the

12

Record exports

ABS trade figures are out today and there’s no doubt about it, August was a cracking month, posting a big jump to record export revenues above $28 billion for the first time and delivering a surplus of $3.1 billion, the second highest ever. The good news came from one primary source, iron ore: As you

13

More European chaos

Sorry this is late today (technical issues). As I said yesterday it’s going to be a tough week for Europe, and last night certainly was that. It started poorly when the Chairman of the Financial Stability Board and soon-to-be head of the European Central Bank, Italian Mario Draghi, admitted that European banks were obviously having

29

NSW units approvals rocket

August building approvals are out and month on month approvals nationally jumped 11.4% from a depressed level. Private sector housing approvals remained very subdued, falling 1% m/m and 9.5% y/y. However units approvals rocketed 35%, propelled mostly by a huge jump in NSW. There were also smaller rises in VIC  and QLD but both remain in down

38

Cut rates, trash the dollar

It’s RBA day today and while the Bloomberg survey of 21 market economists finds that none think the RBA will cut rates, I reckon it is time they did. The Australian economy is just not as strong as the RBA had thought as recently as June. The inflation outlook is nowhere near as dire as

6

Chart of the Day: Euro down

Today’s chart focuses on the Euro/USD cross, from a short term and medium term perspective. After last night’s continued falls on Wall Street and in Euro bourses, the US dollar rally has continued, best exemplified by the falls in the Euro: The daily chart above shows the first breakdown in the Euro coming as the

11

Global PMI’s point down

Overnight, global PMIs painted a gloomy picture of advancing economic weakness. First up, the J.P.Morgan Global PMI dropped into recession for the first time since June 2009, falling from 50.2 in August to 49.9 in September: The new orders index showed greater weakness with a 0.9 point fall: Ironically, the US was the stand out perfomer, with

7

Where Chanos is wrong on China

Jim Chanos was among the earliest folks to go short on China real estate developers. Those shares are now being killed.  It is just amazing that there are some people who are still mocking him. If you really want to mock Jim Chanos, it is the long corruption bit, his long bets on Macau casinos

31

I’m giving up on AFG

My long term readers will be aware that I have followed the loan issuance data from AFG since I started blogging. Over time I have noticed quite a few problems with their reporting and data, most notably a large revision in LVR calculations that went completely unmentioned by AFG themselves. Over the last few months I have

12

Statistics lessons from The Drunkard’s Walk

Leonard Mlodinow’s terrific book The Drunkard’s Walk is an historical narrative on the philosophy of randomness and probability intertwined with modern statistical anecdotes. If the inner nerd in you enjoys a little mathematical philosophy like mine does it is definitely be worth the read. The anecdotes in the book provide lessons on the cautious interpretation

16

October 4 links: Down, down, prices are down

Up: $US, Treasuries, gold Flat: grains, metals, ore Down: CRB, Aussie, euro 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

11

Trading Day

The S&P/ASX 200 Index closed down 111 points or 2.8% today to 3897 points. The market has dropped 10 points in the after hours futures market, whilst Euro and US markets are also set to open down, and at crucial support levels. Breakouts below are likely to result in the next step down. Asian markets

72

Where are all the deposits coming from?

It has been a while since the last mailbag but I got asked a cracking question over the weekend so it is definitely time to share another e-mail with the wise readership of MacroBusiness. Today’s e-mail comes from a reader Harrison who is wondering where all the banking deposits are coming from. Just wondering if

7

Inflation contained for now

Find below the release for today’s TD Securities-Melbourne Institute Monthly Inflation Gauge: The TD Securities – Melbourne Institute Monthly Inflation Gauge rose by 0.1 per cent in September, following a 0.1 per cent decrease in August and a 0.3 per cent rise in July. In the twelve months to September, the Inflation Gauge rose by

24

Manufacturing is getting murdered

Nice. The raging recession in Australian manufacturing is worsening. The PMI dropped to a new cycle low, having been in effective recession for over a year. The internals of the survey are very nasty. 10 out of 12 sectors are shrinking: Capacity utilisation is collapsing, suggesting more job losses are ahead: The rate of new