By Leith van Onselen Finally, we have a high profile Australian – former BHP Billiton chairman and NAB chief executive, Don Argus – talking sense on Australia’s high private debt and how it is a millstone on Australia’s future productivity. From the Australian: Australia was set to inherit the same challenges confronting stricken economies elsewhere
By Leith van Onselen Earlier this month, I noted how falling mining equipment sales could be a harbinger of a sharper than expected reduction in mining capex. Then earlier this week, mining services contractors, Coffey and UGL, cut their earnings guidance for 2013 and announced plans to cut jobs amid a raft of project delays
Propaganda from the loon bin seems to fill ever more pages of the mainstream media. Take this recent example from the UK Higher state pension ages are not only possible (given longer life expectancy) and desirable (given the fiscal costs of state pensions) but later retirement should, in fact, lead to better average health in
By Leith van Onselen There was an announcement in last nights Budget reply speech that should send a shiver down the spine of all highly-indebted ACT home owners: We’ve announced that we’ll reduce by at least 12,000, through natural attrition, the size of the Commonwealth public sector that’s now 20,000 bureaucrats bigger than in 2007.
On Tuesday and Wednesday we were all treated to an inundation of Budget media and research. Last night was Tony Abbott’s Budget reply and there is an echoing silence today. The MSM vaguely gestures a hand at it and there is NO research in the markets that I can find. The best I’ve come with
By Leith van Onselen Please find above an interesting video on ABC’s The Business with Gerard Minack, the soon to be ex-Chief Global Equity Strategist with Morgan Stanley. In this interview, which is Minack’s last before leaving Morgan Stanley, he provides his outlook for the global economy. Minack warns that low interest rates are creating
More of the same overnight with another round of weak data in the US as jobless claims rose 30,000 to 360,000 which is a six week high. The Philly Fed was also very weak dropping from 1.3 in April to -5.4 in May with the market having expected a rise to 2. Housing starts were
The AFR has some deeply erroneous patter about the dollar this morning: The Australian dollar has crashed against the US dollar and currency strategists say it could fall further as confidence about the future of the US economy grows. From $US1.055 on April 12, the Aussie has lost 6 per cent of its buying power against
By Leith van Onselen In the week ended 16 May 2013, the RP Data-Rismark 5-city daily dwelling price index, which covers the five major capital city markets, recorded a -0.45% decline, which followed last week’s 0.38% rise. It was the biggest weekly decline in more than year (see next chart). All capital cities recorded falls
By Leith van Onselen Back in March, Standard and Poors (S&P) released a report warning about the increasing risk of a New Zealand property crash and noting that Australia’s Big Four banks, which own New Zealand’s Big Four, would be on the hook in the event that they needed to be bailed-out (my emphasis): In
From Banking Day: The Reserve Bank of New Zealand has agreed a memorandum of understanding with Finance Minister Bill English that will give the bank the power to limit low equity mortgages as soon as July. …”These new tools…can promote financial stability by helping to build capital buffers and reduce incentives for speculative behaviour, which can contribute
In a note today in which he forecasts a 90 cent Australian dollar within twelve months, Tim Toohey also offered the following chart of GS’ estimates of the mining investment cliff: I’ve added this to my growing accumulation of forecast cliffs and the news is not great with GS more or less supporting ANZ’s
By Leith van Onselen Yesterday afternoon, consultant Wood Mackenzie poured cold water over the view that Australia is on the verge of a mining investment cliff, whereby mining-related capital expenditures (capex) fall sharply from their current lofty level of nearly 7% of GDP (see next chart). From the Wall Street Journal: SYDNEY—Investment in Australia’s resources
Find below the iron ore price table for May 17, 2013: At $15, the 12 month swap to spot spread has returned to historically consistent dimensions for this price range. The spread to rebar remains very wide. So, either both iron ore prices keep falling or rebar keeps rising if the reversion to mean is
Global Macro/Markets: Soros Leads Gold-Stake Cuts Before Bear Market Drop – Bloomberg Gold bar premiums hit record in Asia on supply constraints – Reuters Gold Prices Falling – Business Insider U.S. Officials Deal Blow to Bitcoin – Wall Street Journal The deflation gang – FT Alphaville North America: Brooklyn to California Bubble Threat Grows in
The US equity market rolls on, and if you are a equity money manager and not making money at present, you probably never will. The moves seen in stocks highlight the power behind the bull market, and while bad news is soon forgotten, good news provides another opportunity to buy. Perhaps the raft of data
By Leith van Onselen From the AFR this afternoon comes news that Chinese steel mills have been re-selling iron ore bought under long-term contracts into the spot market, helping to explain why spot prices are at a five month low, 20% below their 2013 peak: China’s steel producers are selling some iron ore cargoes back
By Leith van Onselen Above is an interesting video interview screened earlier today on CNBC with Paul Drake, Founder of View from the Peak: Macro Strategies. In the interview, Drake argues: The European economy is facing a generational shift and a ‘lost generation”, whereby growth will be structurally lower for at least another 10 to
By Leith van Onselen While the major political parties continue to ignore Australia’s highly unaffordable housing, the 2013 New Zealand Budget, released earlier today, announced a variety of measures aimed at boosting supply and improving overall housing affordability. Measures announced included: Introduction of the Housing Accords and Special Housing Areas Bill, which will enable the
Cross-posted from Paul Wallbank Technologist Jaron Lanier says the internet has destroyed the middle classes. He’s probably right, a similar process that put a class of mill workers out of a job in the Eighteenth Century is at work across many industries today. Those loom workers in 18th Century Nottingham were the middle class of the
By Leith van Onselen SQM Research today released rental vacancy data for the month of April, which revealed an increase in the rental vacancy rate to 2.0% nationally, from 1.9% in both March and April 2012 (see next table). From the Media Release: Nationally, the vacancies rose by 0.1%, bringing the national vacancy rate to
By Leith van Onselen From Property Observer today comes news that the Federal Government is lobbying the states to cut stamp duties payable by seniors when they downsize to smaller homes: The federal government has called on state governments to introduce stamp duty concessions for seniors to help encourage them to downsize. Federal ministers
By Leith van Onselen Tonight’s Budget reply speech from Tony Abbott is set to be yet another display of “small target” politics. We can expect the Opposition leader to bag-out the Government’s financial record, all the while recycling the myth that the former Coalition Howard/Costello Government was a sound financial manager, a view debunked recently
By Leith van Onselen China’s ghost cities, the most famous of which is Ordos in inner Mongolia, have regularly been cited as a prime example of China’s unsustainable construction-led economy. In 2009, AlJazeera posted an explosive video showcasing Ordos’ ghost apartments and frenetic pace of construction, which exemplified the “build it and they will come”
Data everywhere and not a drop of growth. Stocks kept keeping on overnight with both the Dow and the S&P touching new all times highs in trade before pulling back a little while stocks in Europe rallied even though we saw some very poor GDP data for the Eurozone. Germany managed to print a moribund
Regular readers will know that the Australian economy is approaching (or already over) the mining investment cliff. Here is my compilation of various estimates: It is pretty clear that the cliff’s edge has arrived. It has been made equally clear this week and last by the gathering number of pledges from big miners that they’ll
By Leith van Onselen New Zealand house prices surged again in April, with the national stratified median price hitting a record $412,500, but prices in New Zealand’s biggest city – Auckland – falling slightly from last month’s record to $595,500 (see next chart). House price growth across New Zealand is accelerating (see next chart). Nationally,
Not that it should be a surprise to most MB readers, but the economic data coming out of nations within the Eurozone is once again “worse than expected”. Last night it started with Italy: Italy’s economy contracted more than expected in the first quarter of 2013, shrinking 0.5% from the previous three months as activity
Cross-posted from Kate Mackenzie at FTAlphaville. ‘Collectively, humanity has yawned and decided to let the dangers mount’ So writes the FT’s Martin Wolf in his column today, which starts out noting that atmospheric carbon dioxide concentrations exceeded 400 parts per million last week, the highest level in 4.5m years. As he says, if we take a prudential
Find below the iron ore price table for May 15, 2013: Rebar futures also sold off sharply. Looks like we’re headed for a test of $120 “price floor” and charts would suggest $110 is the next support level. Iron ore got some good news from analysts yesterday when Morgan Stanley argued that ore will remain
