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Wolfson Economics Prize

Lord Wolfson of Aspley Guise, otherwise known as Simon Wolfson the chief executive of British retailer Next Group and a member of the house of Lords, has announced that he will be funding a £250,000 prize aimed at finding an exit policy for countries wishing to leave the European Monetary Union. The Wolfson Economics Prize will

Latest posts

64

Will you pay for The Oz?

In a stroke of irony, The Australian released the following story online this afternoon: THE Australian has announced it will launch digital subscriptions on Monday, with a three-month free trial for all readers. Publisher News Limited said the national broadsheet’s strategy was built around a digital content pass which would provide access to The Australian online and

5

Trading Day: gold crunched

The S&P/ASX 200 Index closed down 68 points or 1.66% today to 4144 points following heavy falls on commodity markets and poor leads on overnight markets. In after hours trading, the index is steady, with Euro and US markets pointing to small losses. Asian markets experienced similar moves, with Japan’s Nikkei 225 down 1% at

15

NAB survey confirms Dutch disease

The September quarter NAB Business Survey  is out and as you can see above. It shows an economy with slumping confidence and conditions, but stable pricing. NAB also makes a point of describing an economy suffering from an unprecedented division between weakness and strength: Business conditions slump and confidence falters mid-quarter, but monthly profile points to subsequent

15

RBA dials up the bank support

The RBA is pouring it on in favour of the banks just now. That makes sense given the ructions in rippling through global banking. But it’s still interesting to examine the arguments. In a speech today, Malcolm Edey, Assistant Governor (Financial System) doesn’t bother with many, he simply repeats the refrain: In Australia meanwhile the

11

Boring old retail

The great disleveraging is continuing to the point where it is almost a deleveraging. I must ask H&H about the semantic distinction. So, OK, we all know that retail is struggling. But at what point is it fairly priced? A Morningstar report notes what is well known, at least for MB readers, that the savings

5

Chart of the Day: Commodities rule

Today’s chart comes from the MarketSci blog, and illustrates the increasing correlation between commodities and equities: This chart shows the 3 year monthly correlation of the S&P500 (the broadest US equity index) and the Goldman Sachs commodity index, from 1970. Although the GS Index is not as diversified as the CRB Index, the comparison is

5

Germany and France shadowbox

Yesterday’s farcical display of media leak brinkmanship provided some pretty good evidence that the latest European crisis had once again become bogged down in the usual nationalistic politics that we have come to expect from Europe. These games continued overnight with a report from an “unnamed source” via Financial Times Deutschland that Wolfgang Schaeuble told

56

Our mining madness

I had an interesting chat with an old hand in the coal market yesterday. He described how the in the eighties, as Australian coal producers jockeyed to supply Japan, the annual pricing contracts that determined prices and volumes were a like a Presidential cycle. You’d spend a year negotiating, then agree terms, then resume negotiations

34

Rents continue to flat-line

Back in August I noted how the property boosters have shifted from talking-up the prospect of rising house prices to forecasting sharply rising rents: …price stagnation… has created a headache for the property industry. With prices now expected to flat line and rental yields well below both mortgage interest rates and term deposit rates, there is reduced

4

China’s whacky GDP

Here’s a little follow-up on the Chinese GDP numbers. The growth figure produced by the National Bureau of Statistics (i.e. that 9.1% number) is growth in real terms, not nominal terms, one point that some people get confused every now and then.  The nominal yoy change for Q3 GDP was actually 21.3%.  That would mean

13

The jobless vs dole numbers

The RBA and some commentators seem a little confused about the Australian labour market.  Why? Because the ABS labour force data is showing the unemployment rate rising, while the Department of Education, Employment and Workplace Relations (DEEWR) data on income support payments (such as Youth allowance and Newstart) shows a declining number of welfare recipients.

141

Paying for Abbott’s wrecking ball

I should start by stating that the following is not intended as partisan political comment. I have consistently supported a carbon price policy regardless of the Party of the politician proposing it (eg Howard, Rudd, Turnbull and now Gillard). Much has been said of Gillard’s mandate, or more pointedly, lack of mandate to introduce a

2

October 20 links: Losing steam

Down: $US, Treasuries, metals, energy, grains Flat: Aussie, euro Up: CCI Hammered: ore 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

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Trading Day

The S&P/ASX 200 Index closed up 27 points or 0.64% today to 4213 points following the rumor-led rise from overnight US and Euro markets. In after hours trading, the index is steady, with Euro and US markets pointing to modest opens. Asian markets experienced similar moves, with Japan’s Nikkei 225 up 0.35% at 8772 points,

16

China still building empty apartments

Yesterday, Zarathustra’s posted another interesting China report, which contained the below chart showing the continued strong growth (25% YoY) of fixed asset investment: Below find a PBS Newshour video report (h/t Hugh Pavletich) from Beijing-based economist, Yoram Bauman, who explores the possibility of a Beijing housing bubble. In the video, Bauman takes viewers on a

84

The NBN is money well spent

Yesterday, Telstra shareholders voted in support of the deal offered by the federal government and NBN Co. At a glance this deal appears to offer Telstra $11billion compensation for access to its infrastructure facilities, and for the decommissioning of the copper network. For me, the technicalities of this deal are almost immaterial in terms of

1

Telstra plods to the fore

Telstra shareholders have approved the NBN deal, so brokers are unsurprisingly rushing to opine. Telstra offers a high, fully franked yield, so the share price only has to stay stable for it to be a decent play, at least compared with the rest of what is a very uncertain market. According to Citi, which has

4

Edgy consumers

Westpac has just released its October Red Book, a comprehensive guide to consumer sentiment. It really is an exceptional document and well worth a few moments of your time. Westpac’s own summary of the findings reads: The Westpac–Melbourne Institute Consumer Sentiment Survey showed a slight improvement in October, holding on to September’s surprisingly strong 8.1%

4

Cochlear after the recall

Back in September,  I posted on the recall of Cochlear’s Nucleus 5 implant – COH’s primary device which makes up the lion’s share of Cochlear’s revenues (see full article here).  Since the recall there has been no other information released by Cochlear, who promised to give an update at the AGM.  Well, the AGM was held

16

Lower your expectations for Europe

Slowly but surely the news that the “plan for a plan” isn’t going to be anywhere near as impressive as expected. As I warned late last week, the best thing all European leaders could do is talk down expectations because if I have learned anything over the last 18 months of covering the European “crisis”

21

Chart of the Day: 1% income

A very illustrative chart used by a member of the 99% “Occupy Wall Street” crowd, has been captured here: The post goes on to breakdown who makes part of the US 1% crowd, and effectively it is executive managers (CEO’s) and financial professionals. For Australia, the divergence between the 1% income and average worker is

6

Mass confusion in US/China trade debate

Exclusively from Michael Pettis’ newsletter: Last week’s Senate bill on Chinese currency intervention predictably enough brought out all the same old arguments about international trade, and just as predictably has widened the opposing positions in the debate.  Unfortunately the difference between a good outcome, intelligently negotiated, and a bad outcome, is pretty large, but with each

19

Boom and bust in iron ore

You know the ore market is in trouble when contracts start to disintegrate. There’s a raft of reports indicating just that this morning. The pick is from the AFR (and is free) but owing to its archaic attitude to the internet, copy and paste is disabled, so I can’t provide any of it. Here’s an

3

Chinese banks tighten the screw

Since late last week, the news from Chinese media has been that China Construction Bank has raised mortgage rates for first-home mortgages in Beijing.  Sina confirms that banks in more cities are now increasing interest rates.  And now Mingpao says banks in 14 cities have raised mortgages rates. The latest round of increase in interest rates is happening in Beijing,

14

No Refund

As I noted last week Bank of Queensland is showing signs of stress in its loan book, on top of that RPData has recently released data that there is growing stress on real estate agents due to sharp falls in housing transactions. Put these two together and it probably shouldn’t be too much of a surprise

25

October 19 links: European fog

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

0

Banks on rates

Here are three bank takes on interest rates following today’s RBA Minutes. Westpac and Macquarie are dovish. HSBC is neutral. First, Westpac: Reserve Bank of Australia Board meeting minutes confirm scope to ease monetary policy The minutes of the meeting of the Reserve Bank Board of October 4 provided confirmation that the Board now sees

6

Trading Day

The S&P/ASX 200 Index closed down 88.5 points or 2.11% today to 4186 points following weak leads from overnight US and Euro markets. In after hours trading, the index is down slightly, with Euro and US markets also pointing to lower opens. Asian markets experienced similar moves, with Japan’s Nikkei 225 down 1.4% at 8749

11

China still building like bejesus

The National Bureau of Statistics just published the latest set of economic data for third quarter, which sort of disappointed the market. The third quarter GDP grew by 9.1% in real term compared with the same period a year ago, missing expectation of 9.3%.  On a quarter-on-quarter basis, GDP grew by 2.3% in real terms, slightly