Find below a new note from the OECD showing the extent of the global economic slowdown over the past six months and possible solutions for Europe, which is driving it. oecd
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OECD defines the global slowdown
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Links September 7th
Global Macro: Sweden cuts rates to 1.25% Reuters chart ZIRP world it is The ketchup problem with government deficits The Economist and why not to expect a global economy recovery anytime soon The Economist United States: Bubba still has it and gives it up to the Democrats FT (login req’d) ADP delivers 201k for August. Calculated
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ASX Shares Daily – 6th September
By Chris Becker The ASX200 reversed course today, following most of the Asian bourses as speculation mounts on the ECB rate meeting and decisions thereafter tonight – followed by weekly initial jobless claims in the US. It rose 34 points or 0.8% to 4312 points – I’ll take a closer look at the bottom of the post including
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RBA stays bullish on Chinese construction
While the rest of world is paring back its assumptions of the potential for further Chinese urbanisation, the RBA is having none of it. In a paper published yesterday (h/t 3d1k) , the RBA made some guesstimates for the path of ongoing construction and there’s no over-capacity in sight as far out as 2040: This
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China links
Courtesy of Sinocism. Reuters has found some interesting information that may confirm a mid-October opening of the 18th Party Congress. In Ready, steady, go for China Congress, not marathon runners we learn that: A notice on the rescheduling of the 11th China International Exhibition on Public Safety and Security from October 22-25 to December 3-6 is even
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Bill Evans unpacks the participation rate
Bill Evans joins the employment skeptics. Westpac first impressions: August Labour Force Survey Employment –8.8k in August (WBC –5k; mkt 5k). Unemployment rate 5.1%, from 5.2% in July as participation rate falls 0.2ppts to 65.0%. In August, total employment fell 8.8k as part-time employment declined 9.3k. The outcome was a little below our expectation, but
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Employment in detail
By Leith van Onselen As reported by the Houses & Holes earlier, the Australian Bureau of Statistics (ABS) has released labour force data for the month of August, which reported a slight reduction in the headline unemployment rate to 5.1% from 5.2% in July, but a decrease in the total number of jobs across the
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ANZ fires ABS labour data
It seems MB readers are not the only ones incredulous at today’s ABS Labour Force survey. ANZ is out quick smart with an unusually blunt note dismissing the entire release. Worth a read. Labour Force Aug 12 Quick Reaction
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Our WEF competitiveness
Here are Australia’s two pages from the recent WEF competitiveness rankings: This report is very long and wading through it is beyond me today. But you folks can go to town! Wef Gcr Report 2011-12
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Jobs and unemployment fall
Yes, that’s right, jobs and unemployment both fell. In August, full time jobs were up 600 but part time down 9,300, net down 8,800. The unemployment rate fell to 5.1% because the participation rate also fell 0.2% to 65%, which is the lowest since 2006. Revisions to last month were down, from 14k jobs to
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Commodities daily
Courtesy of ANZ. ANZ Commodity Daily 699 060912
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ASX tracks the ASX
After failing to merge with the Singapore exchange the ASX has languished in the doldrums. For the last year or so the share price has pretty much tracked itself (the All Ords), which is hardly surprising. Deutsche has a hold recommendation and there seems little reason to disagree. The target price is a very modest $31:
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Gina announces 3d1k award
From the AFR: Mining billionaire Gina Rinehart has offered a $50,000 bounty to a representative of the resources industry who best promotes mining in the face of “far left or non-understanding media attacks”. …“We need people and we have some who are prepared to be unpopular or very unpopular in some areas of our media,”
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Macro Investor: Shorting iron ore
Iron ore prices (as measured by 62% fines) have fallen over 50% from their peak at almost $200 per tonne, after doubling twice from early 2009. This dynamic is due to collapsing demand, as inventories in China climb to new heights amid increasing volume output from Chinese, Australia, African and Brazilian suppliers. …Due to the
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Victoria continues to deleverage
By Leith van Onselen The Victorian Department of Sustainability & Environment (DSE) released transfer and mortgage data for the month of August, which shows continued weakness in the number of housing transfers and finance commitments. First, below is a chart showing the rolling annual number of housing transfers from February 2003 to May 2012: According
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Macro Morning: Failed German bond auction!
More leaks out of the Europe have laid out what is at the table at tonight’s ECB meeting. There will be no caps on peripheral bond yields, no more monetary stimulus but the ECB is planning to butt short end bonds in unlimited amounts. These purchases will then be sterilised by withdrawing stimulus elsewhere which
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Germany slides into recession
Composite Purchasing manager Index(PMI) data was released overnight for the Eurozone and much like the manufacturing release earlier in the week there was nothing to get excited about. German services collapsed in August to their worst reading since July 2009 and the composite index for the country moved deeper in contraction at 46.3. It now
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Is the iron ore price fall structural?
As I wrote yesterday morning, I’m on board with the iron ore bounce theory. There is enough Chinese stimulus in the pipeline to get things moving for a while later in the year (I think!). Though I’m seriously starting to wonder from what price the bounce will come. Overnight action was not too bad for
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Fitch dumps Fortescue onto negative watch
Late yesterday Fitch joined Moody’s in adding heat to FMG: Fitch Ratings-Sydney-05 September 2012: This announcement corrects the version published earlier today. The third paragraph should read that the company has completed negotiations on the sale of its Solomon power station rather than being in advanced negotiations as previously stated. An amended version follows: Fitch
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China hard landing series: Over-investment
Courtesy of Also Sprach Analyst. One of the key arguments made against the idea that China can grow at high rates forever is that it has already been investing too much. In China’s national accounts, investment accounts for roughly half of total output, something almost unprecedented. The high rate of investment is not sustainable. And as investment is a large chunk
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Steel glut versus more trains
Steel industry in China is now known to be unprofitable. Profit margins are close to nothing, while production capacity is high. Meanwhile, banks have to roll over their debts, apparently, to keep them alive. However, production has not really slowed down much despite clearly slowing demand. Worse still, and interestingly (although not surprisingly), we learned yesterday that the steel
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Tax insights from the national accounts
Courtesy of Mark the Graph. Table 18 of the National Accounts gives us a window on government revenue. The growth rate in the revenue from the various sectors of the economy gives an indication on whether those sectors are doing well or not. I will limit the following analysis to the GFC and subsequent years –
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Links September 6th
Global Macro: Investment Outlook – The Lending Lindy – PIMCO Barclays heads roll over Libor – The Telegraph Bloomberg Markets’ 50 Most Influential: The People With the Power – Bloomberg Econbrowser: The gold standard and economic growth – Econbrowser Is That All There Is? The Remarkably Small Costs of Quantitative Easing – piie.com Economist’s View:
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ASX Shares Daily – 5th September
By Chris Becker Well well. Sometimes a day not fully plugged into the matrix that is the markets gives you some focus, because when I arrived back at my Terminal late this afternoon, after seeing the falls in iron ore early this morning, I was not at all surprised
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Banks turn off banks
The health of the banks is critical to the direction of the Australian market. Two reports are looking closely at earnings and asset quality, and both raise questions. First, Credit Suisse looks at the accounting treatment of earnings. Since 2010 major banks have adopted increasingly aggressive accounting treatments, with aggregate major bank earnings benefiting cash earnings by
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Gina addresses the nation
By popular demand, here is Gina Reinhart’s address to the Sydney Mining Club (nation).
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GDP in detail
By Leith van Onselen As noted by Houses and Holes earlier today, the Australian Bureau of Statistics (ABS) today released the national accounts for the June quarter, which registered a 0.6% increase in real GDP over the quarter and a 3.7% rise over the year. The market had expected GDP to increase by 0.7% over
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China links
Courtesy of Sinocism. The New York Times has a very disturbing front page story about Africa’s elephants being slaughtered in a poaching frenzy: The vast majority of the illegal ivory — experts say as much as 70 percent — is flowing to China, and though the Chinese have coveted ivory for centuries, never before have so
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Commodities daily
Courtesy of ANZ. ANZ Commodity Daily 698 050912