6

Macquarie takes Note

In today’s bond’s spotlight, we follow up our recent “Mysterious Millionaires Factory” article on Macquarie Group (MQG) to take a look at their floating rate note.  The note started life as a Macquarie Bank Limited (MBL) security, hence it’s ASX code.  MBL was subsequently incorporated into Macquarie Group.  As such, I will refer to MQG

Latest posts

8

Market Morning

Note: Market Morning is an update on overnight markets that was previously performed late in the afternoon in the “Trading Day” post. This will be more timely and provide our readers with an overview before the Asian risk markets open. Risk markets surged overnight, with two factors at play: first in Europe, a very successful

14

Europe braces for long winter

Well it looks like Santa finally stuck his head out of the dark cave for a look around. It is yet to be seen if he rams it straight back in again because he doesn’t like the weather, but at least he has appeared for one night. In Europe Santa has come in the form

15

Should I stay or should I go now?

According to the December Westpac-Melbourne Institute Consumer Sentiment survey, it appears most Australians will stay at home for Christmas, but those who intend to travel, no surprise, will be heading overseas. The so-called “staycation” option outweighs travelling by 69% to 31% – but in context, the latter stat has been slipping, with 38% travellng in

4

Cochlear – brazing for a comeback

Cochlear released the following update on the recent recall of its core product, the Nucleus 5 implant, yesterday: The results of our investigation to date point to a loss of hermeticity from unexpected variations in the brazing process during manufacturing. Brazing is the process that joins the feedthrough to the titanium chassis. Variations in the

36

Here comes the Chinese burn

Over the last few days, a large selection of articles have appeared exposing cracks within the Chinese economy and suggesting that the China’s housing bubble might finally have burst. Paul Krugman, has finally weighed-in to the China debate drawing eerie parallels with the 1980s Japanese economy: Consider the following picture: Recent growth has relied on

12

Chart of the Day: US unemployment falls

Today’s chart comes from Calculated Risk again and on the back of last nights excellent housing starts number which has ignited the long awaited Santa Rally, examines the current US unemployment rate, vs. the recession high: Obviously there has been aggregate improvement in the number, although this is the underreported U-3 measure, not the realistic

11

December 21st Links: Santa comes to town

Sold: Treasuries, $US Undollar ho ho ho: euro, gold, metals, ore, grains, Aussie, energy, CRB 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

Note: Coverage of overnight markets will now be done as “Market Morning” before the Asian markets open. Trading Day will focus on the Asian session and Australian stocks. After yesterdays walloping, the S&P/ASX 200 Index closed down just over 2 points to 4060 today, after absorbing another night of turbulence on risk markets. As I

10

European funding confusion

A bit more from last night’s European Fin-Min teleconference: European Union finance ministers failed to agree Monday to raise the ceiling of funds that can be held at any given time by the euro area’s transitional and permanent rescue funds, an EU official said Monday. The 27 finance ministers were in a teleconference that lasted

32

Skills shortage myths

The shrill voice of commentators warning of Australia’s apparent skills shortage is deafening. But there are a number of reasons why this claim, and the inevitable recommendation for government to increase quotas of skilled migrants, is flawed, and why the solution is not in the best interests of Australia in the long run. For the acute observer

0

China Links

Courtesy of Sinocism: Taylor & Francis Online :: Response to David Wright’s Commentary – Journal of Strategic Studies – Volume 34, Issue 5 – Taylor & Francis Online :: Response to ‘Space, China’s Tactical Frontier’ by Eric Hagt and Matthew Durnin – Journal of Strategic Studies – Volume 34, Issue 5 – Taylor & Francis

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RBA Minutes for December

The Reserve Bank of Australia (RBA) has released the minutes from its December meeting where the cash rate was lowered 25 basis points (0.25%) to 4.25%: Financial Markets The Board had an extensive discussion about the situation in Europe. After a positive reaction to the European Union summit in late October, financial market sentiment deteriorated

32

Brokers very bullish

With the Aussie share market still battening down the hatches and the 85% probability of a Santa Rally sinking hopes each day, its interesting to see what the consensus is saying about where the market should be. The table below comes from ASXIQ who has collated the median price targets of analysts and brokers followed

46

ACTU releases first jobs report

The Australian Council of Trade Unions (ACTU) has released its inaugural Jobs Report, and is packed full of fascinating charts, analysis and details on the Australian job market. The summary highlights the sideways economy of 2011 (which has only grown 0.53% per capita since March 2008) – highlights added: Employment rose by 40 400 in

7

Fitch: Mortgage arrears by postcode

Fitch has released its latest mortgage arrears report for end of September 2011, with marked declines across the country since the March report. All states and territories showed improvement, overall delinquencies fell from 1.77% to 1.42%, according to Fitch on “account of stable interest rates”. Notably, the 10 worst performing regions were the same in

9

Living away from the tax man

The Commonwealth Treasury released a consultation paper last month on propose reforms to Fringe Benefits Tax (FBT), particularly, the tax treatment of Living Away From Home Allowances (LAFHA). Apparently there are two major concerns leading to this reform.  The first, but unstated reason, is to increase tax revenue – which is more clearly articulated in

1

Market Morning

Note: Market Morning is an update on overnight markets that was previously performed late in the afternoon in the “Trading Day” post. This will be more timely and provide our readers with an overview before the Asian risk markets open. Risk markets fell overnight, most likely due to the comments by ECB President Mario Draghi

42

Guest Post: The case for European optimism

One of the great things about being involved in the creation of MacroBusiness is that we appear to have managed to build a platform where well educated people from all walks of life can share their knowledge of the economics and political economics. This has been quite a humbling experience, but it has also taught

58

Banks reliving 2008

Yesterday, Houses and Holes penned a cracking post questioning the Australian banks’ gigantic external liabilities that are exposing the financial system to the risk of a sudden liquidity shock, and have placed Australian taxpayers on the hook for potential bank bailouts. For added context, please find below two charts summarising the banks’ offshore funding exposures.

12

Charting Australia’s population growth

The Australian Bureau of Statistics (ABS) yesterday released the Australian Demographic Statistics for the June Quarter 2011. Below are a series of charts summarising the key trends relating to Australia’s population growth. First, a chart showing net overseas migration (NOM), which measures in/out migration of anyone residing/leaving Australia for a period of 12 months or

3

Chart of the Day: US deleveraging

Today’s chart comes from Calculated Risk and calculates the Mortgage Equity Withdrawal (MEW), as a percentage of disposable income. This is derived from the Fed Flow of Funds Data, as explained: This is an aggregate number, and is a combination of homeowners extracting equity (hence the name “MEW”, but there is little MEW right now!),

1

December 20th: Zombies march on

Up again: Treasuries, $US Flat or slipping away: euro, gold, metals, ore, grains, Aussie, energy, CRB 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

19

Trading Day

The S&P/ASX 200 Index closed down almost 100 points or 2.43% to 4060 today, after falling sharply in the morning and following the news of the death of North Korean dictator Kim Jong Il. However, its not the death of a despot that has driven markets down. As I suggested last week, the market appeared

25

Getting gold wrong

I generally don’t mind a bit of the AFR’s commodities commentator, Stephen Wyatt. But today he shows a complete lack of insight into the dynamics that drive the gold market claiming that: Gold is behaving badly. It’s supposed to be a safe-haven asset but, just when the global economy looks like going to hell in

45

No super for you (updated)

With the end of the calendar year approaching and with the market still oscillating around its lows, super funds are scrambling to put a good light on their meagre returns. The news today for non-self managed funds was foreboding: Research firm Chant West estimates that the average fund will have shrunk in value by around

20

Asia’s bad hair day

In case you are wondering what happened to the Asian markets after lunch: Kim Jong Il, the second-generation North Korean dictator who defied global condemnation to build nuclear weapons while his people starved, has died, state media reported. A government statement called on North Koreans to “loyally follow” his son, Kim Jong Un. Kim, 70,

0

China links

Courtesy of Sinocism: Chinese scientists finish sequencing Genghis Khan descendant’s genome – Xinhua | English.news.cn – Joint sea & air patrol in East China Sea – Xinhua | English.news.cn – 人民日报-社交网络管理是各国共同课题 – Today’s People’s Daily p3. Management of Social Networking Sites is an issue in every country 唐季礼之谜 上海“东方好莱坞”开发争议 – 宏观 – 21世纪网 – 用车:坐豪华奥迪的局长们 – 宏观 – 21世纪网 –

48

Ralph Norris goes all in on moral hazard

For much of this year, I have argued that the big four banks are being protected by regulatory authorities and the government, which have deployed a smoke screen around the liability side of bank balance sheets. I call this fog Invisopower! One of the reasons I have argued that this is not such a good

21

Billabong dries up

The slow death march of the retailers continue, with Billabong (BBG) added alongside JB Hi-Fi today, announcing an estimated $20-25 million or approx. 25% drop in earnings (before interest and tax) for the six months ending December 2011, compared to the same period in 2010. The clothes manufacturer and retailer noted that this estimate is