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Charting China’s five-year plan

Bernard Hickey at Interest.co.nz yesterday alerted me to an interesting presentation by the Brookings Institution on China’s latest 5-year plan, which has been widely discussed as focussed on sustainable growth and reducing inflation, rather than going for growth for the sake of it. The presentation contains a series of excellent charts summarising China’s progress and

Latest posts

47

Bad bank provisioning

Over the last few months at Macrobusiness we have been discussing the changing face of the economy in light of what seems to be a guided transition away from the “old growth” economy which was driven mainly by credit tipped into housing. This presents an issue for the vendors of the old economy, especially the

14

June 22 links: Greek illusions

Down: $US, ore Flat: energy Up: CRB, metals, grains, euro, Aussie, gold Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece The illusion of voluntary haircuts. BBC, FT, Reuters ESM altered. FT Nigel Farage. Zero Hedge UK prepares for Greek default. Telegraph And it should. Martin Wolf Bank exposures. Alphaville Examining QEs. Credit Writdowns Home sales slowing again. Calculated Risk Chinese inflation washing up on US shores. WSJ Commodity

27

Racist FIRB

The Lowy Institute today released a study into Chinese attitudes towards investing in Australia. The research makes for sobering reading. In my view, we have made a complete hash of FIRB, to the point where its secret operations more resemble an arm of ASIS than they do a transparnent foreign investment review panel. The report

7

The great equities mystery

Brokers like to either sit on the fence or look like gurus. Let’s have a look at two examples of both. Citi is opintnig out that over the last two months, the Australian market has corrected a little more than the US and other major markets, partly a result of commodity prices pulling back and

7

Update: Fosters should sell, maybe

News is out that Fosters Group (FGL) just knocked back a buy-out bid by SABMiller worth $9.5billion, claiming it significantly undervalues the company.  That’s a big call by the beer barons; the bid represented a per-share value of $4.90 and Fosters is trading around $4.50.  Let’s see if it stacks up based on the fundamentals. Fosters’ fundamentals

17

ABARE bets on US stimulus

The ABARE quarterly update of commodity prices for the year ahead is out today. First, the key macroeconomic assumptions:   God knows, it’s no easy job putting that lot together but let’s unpack a couple of assumptions. US growth projected at 2.9%, hmmm…well, maybe. The first quarter of this year was 1.8% and the economy

0

Trading Day: 21st June

The S&P/ASX 200 jumped over 1% on the open from positive leads from US markets, but has stalled after midday, now at 4490 points, up 38 or 0.9%. Asian markets are up, with the Nikkei up nearly 1 percent to 9436 points (just above its medium term support), the Hang Seng also up 0.47% and

14

Clearly dovish minutes

Below find the complete RBA minutes from the recent meeting. Now we know what’s got them jumping and it looks like another win for MacroBusiness. Scroll to the final paragraph and you’ll find this key statement: While there had been additional evidence of the coming strong pick-up in investment in the resources sector, activity remained

6

When the Australian dollar strikes midnight

We haven’t seen a real risk off event yet as most people seem still to be trading as if there is going to be a resolution to the Greek crisis and also, I think, because all the recent volatility has pushed people to the sidelines. So the Aussie has actually been performing superbly all things

13

The Aussie bank safe harbour meme

Given the headwinds facing the Australian economy with regard to household restraint, lack of demand for credit and so on, challenges are evident for the listed banks. I am of the belief that households desire for savings is a structural shift so the demand for the services Australian banks offer is likely to be stagnant

28

The commodity bubble

In its recent Bulletin, the RBA has a new piece of research that questions the role of financialisation in commodity prices. The research has some spectacular charts and ultimately concludes that new financial instruments “short-run price dynamics for some commodities, the level and volatility of commodity prices appear to be primarily determined by fundamental factors.”

42

Can super save the housing market?

This blog has talked a lot about government policies that have contributed to Australia’s sky high cost of housing – from supply constraints to the first home buyers grant, negative gearing and implicit and explicit support provided to Australia’s mortgage lenders. One topic that has yet to be discussed is the Government’s recent changes to superannuation laws enabling

14

Catching a falling knife

Those who keep an eye on the Australian share market could not have helped but have noticed its direction of late – down.  The ASX200 has lost 10% since April, as shown in the graph below. No doubt a number of traders have profited from the correction, with those possessing the best line drawing skills

0

June 21 links: Waiting for Bernanke

Up: $US Flat: ore, energy, metals, grains, euro, Aussie, gold Down: CRB Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece Greece wrangles. WSJ Not over. WSJ Italy the final battleground. FT HK house prices to fall by 15% by year end. Bloomberg Zombie bonds. Bloomberg US deleveraging continues. Bonddad America’s shrinking households. The Economist Synthetic prime brokerage. Alphaville Obama missed the boat on bank reform. Big Picture China buys

25

Chinese soft landing: 1 in 3 chance

From Credit Suisse comes this must read report into Chinese bank debt, on and off balance sheet, and the likely fallout in the coming slow down. Rising risks to asset quality Our analysis shows China’s credit-to-GDPhas risen to alarming levels in the past two years due to massive off-balance-sheet financing. Market has only focused on banking

41

Greece: End of days ?

Another day, another episode in the soap opera that is European economics. It seems more detached from reality the longer it goes on. From Reuters: Euro zone finance ministers postponed a final decision on extending 12 billion euros ($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.

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Trading Day: 20th June

The S&P/ASX 200 rebounded on the open from positive leads from “rally” in US and EU markets on Friday, but has since gone slightly in the red, or 2.5 points down, back below 4500 points just after midday. Asian markets are actually up, with the Nikkei up over half a percent to 9406 points (just

14

Is the RBA or market wrong?

In its weekly economic missive this morning, Macquarie Bank has an interesting take on the current mismatch between the RBA’s stop/start hawkish rhetoric and pricing in the interest rate futures market. The Macquarie Weekly: The central bank that cried wolf For the past year, the Reserve Bank of Australia has been forecasting great things for

21

Want Australian dollars with that?

News in The Australian this morning that the Russians are buying Aussie Dollars is just another example of the kinds of forces that are at work as a result of the rerating of Australia and our currency. From The Australian: The Russian Central Bank will pour up to $US5 billion ($4.7bn) into the Australian dollar

27

The neglected art of selling

By low, sell high!  That oft-used 80s catch cry is what all investors should aim to do.  In most cases the first part – buy low – can often be the easiest part to do.  I could have picked 10 random stocks from the ASX200 in March 2009 and I’d be on a winner because

43

Old economy fights back

Last week, the Unconventional Economist made a fascinating comparison between the rhetoric of the Canadian and Australian central banks on overvalued houses. He noted how much more candid the Canadian central bank has been about the degree of house price overvaluation and the need to mitigate those risks. As we know, neither the government nor

3

June 20 links: Gimme back the old economy

Europe to withhold half of Greek aid. Bloomberg European liquidity. Zero Hedge Core Europe and Greece. Felix Salmon Central Europe and Greece. Beyondbrics The euro will survive. Wolfgang Munchau Mismanaged crisis. Gavyn Davies FOMC meeting preview. Calculated risk Week ahead for the Dow. Calculated Risk Japan finds hot spots. Washington Post China copies Austrian city. Daily Mail (h/t

27

Qld’s budget backfire

Last week I mentioned that Queensland’s tax back-flipping government was introducing some strange new tinkering to the housing market as of August 1st this year. [They are] removing the deduction of primary place of residence stamp duty as of August 1. By removing the stamp duty concession non-first home buyer owner occupiers purchasing a median value

27

China and the future of capitalism

Let’s try some more scenarios, but this time with your participation. My reasoning is this. Most economic and financial commentary is about telling the story of the past leading up to the present. So why not try to tell the story of the future? After all, that is what matters for investment and policy. Can’t

26

Weekend Musings: The see-saw, endless spruik

My,  that was a quick week. A couple of things in the thinker this weekend. The see-saw After a very successful muse last weekend about the economics of Futureboom! I have been thinking a little more on the intricacies of what I can see happening in the macro-economy. Glenn Steven’s speech posted by H&H this

1

Australian Dollar Weekly Wrap

The Aussie and the markets performance this week has actually been very constructive for a move higher if Greece ever gets sorted. There is enough pressure on politicians to get their act together and we had German Chancellor merkel backing away from a bail in of investors overnight which gave some hope that a rabbit

10

Weekend reading: You call that a rally?

Crushed: $US, energy Down: ore Flat:  metals, grains Up: euro, Aussie, CRB, gold Sovereign easing: Ireland, Portugal, Spain, Italy, Belgium, Greece Germany concedes. FT As predicted and solves nothing… Greek maths. Zero Hedge Greece’s Lehman moment. Alphaville Renew Greece. Mohammed El-Erian Beginning global restructuring. Chris Whalen Michael Pettis podcast on China. Alphaville China’s political problem. Bloomberg China house prices still rising. Bloomberg More layoffs coming to Wall St. NYT

17

The two faces of housing data

RPData’s latest newsletter highlights that the housing market is falling unevenly, with the top of the market taking a bigger hit than the rest of the market at this stage. With the premium market underperforming, many of the higher priced capital city regions have recorded a significant decline in median house prices since they peaked