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April 21 Links: Rebound and budget

DE Again Up: gold, metals, energy Rocket: Aussie , new new record Down: ore, $US Mixed: grains Analysis Reuters Angola to offer sovereign bonds Bloomberg Euro economists expect Greek default Reuters Euro Chamber of Commerce unhappy with China Telegraph UK France/Italy to send troops to Libya BBC , but only for “advice” There is a war of a different kind at Qantas

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Irish bust video

Max Keiser yesterday posted a video exposé (below) on the damage caused by the bursting of the Irish housing bubble and how the bad debts of the Irish banks have been transferred to Irish taxpayers (h/t Mish and Rota Fortuna). For readers unfamiliar with what happened in Ireland, consider reading my December article, Unluck of the

16

Disleveraging hits the Budget

It is that time of year again where the government, specifically the treasurer gets to tell you what a wonderful job they/he are doing. This year the Treasurer seems to be using the old “it was the last guys fault” strategy to cover up his own inadequacies. His latest speech in Brisbane was a definitely

1

Westpac: Leading indicators solid

From Westpac and the Melbourne Institute today comes leading indicators for the economy (full report below). And they’re solid: The annualised growth rate of the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity three to nine months into the future, was 4.7% in February 2011, above its long term trend of

12

Trading Day: 20th April

Note: anything in quotation marks is a reference to earlier notes that I’ve made. These comments are read in context of an investor/trader with a medium term timeframe. The S&P/ASX200 Index – XJO The S&P/ASX200 has bounced back slightly this morning on reflated overseas markets, up 0.7% around midday. As I said yesterday, the market

72

Abolish the RBA

There is absolutely no evidence or even studies to produce evidence that the RBA provides any value to the Australian people. Anything the RBA does could be undertaken by the private banking sector. In fact the RBA can only perform three types of tasks. Tasks that the private sector would or are undertaking given the

7

Australian dollar beloved by all

Yesterday I wrote that the Aussie was the Cinderella of the ugly sister currency contest and posed the question where in the world would you invest at the moment? This morning a Bloomberg story  highlights just this. Importantly it suggests ongoing buying support for the Aussie regardless of whether we are in a risk on, risk off or neutral market.

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The gov’ment done it

An investment note by Southern Cross looks at the effect of Australia’s political leadership on the stock market, which is a subject not often addressed, at least by analysts. Privately, many say that the Resources Super Profits Tax has scared off foreign investors for a very long time because it made Australia look “socialist”. If

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Spinning the Budget

The Treasurer has a nice splash across the media today on why the Budget will be painful. The following from Yahoo7 is as good as any: The second phase of the mining boom won’t produce the “rivers of gold” of government revenue like the former coalition government enjoyed and wasted, Treasurer Wayne Swan says. In

0

April 20 links: Full faith and credit

Up: grains, gold, metals, energy. Flat: Aussie Down: ore, $US. Greek two-year higher still. Bloomberg Contagion: Portugal, Spain, Italy, Belgium Hurdles to Greek restructuring. Alphaville S&P negative watch smackdown. Naked Capitalism Asia backs US debt. Reuters American housing on the nose. Bloomberg, Calculated Risk QE 2.5. Bloomberg We need SWF. WSJ Tough Budget. SMH These cuts only mean one thing, they projected too much growth

6

Australian dollar on support

With all the hoopla about the negative ratings watch for the US, the price action for the AUD/USD over the past day or so is instructive. Back on Saturday, when I did the weekly update for the Aussie I said that  “when I look at correlated markets like equities I think their momentum is waning

5

D&B report credit concerns

Dunn & Bradstreet’s latest report on credit is out and it is not for the faint hearted. One third of Australians expect to experience difficulties meeting their credit commitments over the next three months and nearly 40 per cent anticipate having to use their credit card to cover otherwise unaffordable expenses. At the same time

0

Trading Day: 19th April

Note: anything in quotation marks is a reference to earlier notes that I’ve made. These comments are read in context of an investor/trader with a medium term timeframe. The S&P/ASX200 Index – XJO The S&P/ASX200 has fallen substantially this morning and continues into midday trading, hovering around 4800 points. This is now well below its

0

Schizoid RBA minutes

The following is the domestic economy section of the Minutes on Monetary Policy released today. Any regular reader of MacroBusiness will be unsurpised by the PROCESSION of negatives noted during the meeting. Indeed, we might have written these notes ourselves over the past two months. In total, it’s a very negative assessment of the economy that

5

The great, steaming debt pile

Standard and Poors last night placed the outlook for the US’s AAA rating on negative watch for a potential downgrade citing not just this recent budgetary impasse but also the trajectory of the United States Governments debt position. The charts below show just why S&P is worried.   It’s common these days to think of

12

Don’t worry, be happy

The consensus on MacroBusiness is that housing currently has more downside risk than upside potential, that the banks’s earning growth is increasingly limited and that the consumer has switched off. Being a bear by temperament myself, I can but agree. But we bears are often wrong and it is worth at least considering the opposite case.

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Another ponzi trick exposed

Merrill Lynch analysts (full report below) have sprung the banks on another method they use to expand the amount of money they can lend to anyone and everyone. From Banking Day: The long-standing use by banks of the poverty line as a proxy for living costs is the subject of a fresh, but sceptical, review

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Mixed signals

There’s a lot of noise today. And yes, it’s threatening to be a “risk off” event. Some typical signs are there. Gold is up. Commodities and the Aussie are down. The euro got monstered. The $US bounced hard. But it isn’t that simple. Grains are up solidly which is definitely a growth/inflation play and there

6

April 19 links: Sovereign default

Rockets: $US, grains. Up: gold. Down: ore, metals, energy, Aussie. S&P puts US on downgrade watch. FT No more QE. FT Cutting the US deficit. Calculated Risk US bond volatility. Alphaville Richard Koo on the absurdity of the downgrade. Money Game Greek two-year goes parabolic. Bloomberg Contagion: Portugal, Spain, Italy, Belgium The toxic route to fiscal union. FT Chinese inflation. NYT Fixing prices.

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Gold to break through $US1500 an ounce?

Gold looks like breaking through the $US1500 an ounce level in overnight trading. This new nominal historic high comes as no surprise due to the metals relentless march upwards in a primary bull market that has lasted 10 years. What is surprising is golds recent correlation with all other risk assets (e.g equity markets, commodities

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NZ considers new tools to combat housing bubbles

Earlier this month, I wrote about two policy actions being undertaken by the Reserve Bank of New Zealand (RBNZ) and the New Zealand Government aimed indirectly at reducing the economy’s exposure to the housing market. These measures included: the Open Bank Resolution (OBR) Policy, which seeks to protect taxpayers from funding future bank bailouts; and

2

Europe’s new issues

As I noted in my previous article on Portugal the Fins have been posturing for more serious austerity from the PIIGS. It seems however that as of today the circumstances in Finland have changed somewhat and the outcome for the rest of Europe could have just become far more difficult. A Finnish election has just been

26

Roubini calls time on China (part 2)

Earlier this month, Houses and Holes posted a report from Professor Nouriel Roubini warning that the Chinese economy is overheating and risks a sharp slowdown sometime after 2013. Now Professor Roubini has followed up with an article on Project Syndicate fleshing-out his views in greater detail. Professor Roubini  more or less supports earlier warnings from Michael Pettis and prominent China

27

Queensland heading for recession ?

It would not be a surprise to my readers that Queensland’s economy is in serious trouble. Last week I noted that the Gold Coast’s unemployment has “surprisingly” shot up. Australian Bureau of Statistics figures released yesterday have revealed the Gold Coast unemployment rate climbed to 8.1 per cent last month, up from 6.5 per cent in

8

Craig James capitulates

Wow, it’s funny what a bit of accountability can do. Last week I noted  how Craig James at Commsec was a part of a more general discourse that needed to stop looking down on Australians for adopting a laudable savings cultre and voila today we have a new tone. From Smart Company: Aussie businesses have

0

Trading Day: 18th April

Note: anything in quotation marks is a reference to earlier notes that I’ve made. These comments are read in context of an investor/trader with a medium term timeframe. S&P/ASX200 Index – XJO The S&P/ASX200 is subdued this morning, just above 4850 points. The market is hovering just below its 15 day moving average and decelerating.

3

Woolworth’s Q3 Update: Nothing Unexpected

Woolworths released its FY11 Q3 sales update today, reaffirming the latest guidance for FY11 NPAT to increase by 5% to 8%.  The market seemed to like the news, with shares up about 1% in today’s trading. Funny thing is, the update didn’t contain any unexpected news.  Here’s a brief summary by segment:  Supermarket sales are

6

Global inflation surging

China, India, Europe, UK and even US inflation is accelerating sharply at the moment. Data over the weekend reinforced that the period of ultra-low rates is probably ending and rates might move more sharply than markets expect even with growth not yet assured.   Over the weekend the PBoC increased the reserve requirements for their

2

Catching a falling builder

Leighton’s debacle has been well analysed  on MacroBusiness. It appears to be a problem of poor incentive structures, which had been changed. Bonuses were paid for winning tenders, not on whether they would be profitable. Different divisions of the company bid against each other. The result was like paying fund managers for assets under management,

20

Bias to tighten

I was in a meeting the other day and was asked a question on what the implications of the higher savings rate (and consequent fall in demand for credit and lower retail sales) would be on interest rates and would the RBA have to act to address this issue. The answer I gave was off